ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 REPORT STAKEHOLDER ANNUAL ENERGY ERGON

GETTING THE BALANCE RIGHT

ANNUAL STAKEHOLDER REPORT 2009/10

Customer Service 13 10 46 7.00am – 6.30pm, Monday to Friday Faults Only 13 22 96 24 hours a day, 7 days a week WORKING TOGETHER TO MANAGE ELECTRICITY DEMAND Life-Threatening Emergencies Only Ergon Energy Corporation Limited Triple zero (000) or 13 16 70 ABN 50 087 646 062 AND SUPPORT QUEENSLAND’S WAY OF LIFE 24 hours a day, 7 days a week Ergon Energy Queensland Pty Ltd Office of the Customer Advocate ABN 11 121 177 802 ANNUAL STAKEHOLDER REPORT 2009/10 Customer Advocate PO Box 15107 Brisbane QLD 4002 [email protected] ergon.com.au Christine Robertson Energy Education Advisor

Working with the

Mark Biffanti community Area Operations p 22 Manager Burdekin

James Bangay Manager Information Strategy There when you

need usp 30 Advancing

technologies The attached CD contains the Annual Financial Report for Ergon Energy Corporation Limited and its p 53 Controlled Entities – including the Director’s Report, our Financial Statements and Notes, as well as the Directors’ Declaration and Independent Audit Report.

It also includes an electronic version of this report, a summary of our Statement of Corporate Intent and an index of the Global Reporting Initiative (GRI) indicators.

Additional printed versions of the Annual Financial Report can be obtained by contacting us on 13 10 46. Ergon Energy’s Annual Stakeholder Report 2008/09 won KEY SERVICE CENTRES the ‘best overall’ category in the Queensland Public Sector Annual Reporting Awards, as well as Best Government- Cairns owned Corporation/ Statutory Authority Annual Report Showing 109 Lake Street CAIRNS QLD 4870 and Best Corporate Governance Annual Report. Townsville (Registered Office) Leadership 22 Walker Street TOWNSVILLE QLD 4810 The report was also highly commended by the Energy p 51 Mackay Supply Association of Australia (ESAA) Sustainable Practice Cnr Gordon and Gregory Streets MACKAY QLD 4740 Framework Awards and maintained Silver benchmarking Rockhampton standard in the Australian Reporting Awards. Cnr Fitzroy and Alma Streets ROCKHAMPTON QLD 4700 Maryborough Rosemarie Price 97-99 Adelaide Street MARYBOROUGH QLD 4650 Customer Response and Toowoomba Improvement Manager Cnr South and Hampton Streets TOOWOOMBA QLD 4350 Brisbane This report is printed on FSC certified 9 Lives Silk 80 61 Mary Street BRISBANE QLD 4000 environmentally stringent coated paper. HAVE YOU SEEN

THE SIGNS OF Bree Nott ‘ENERGY SENSE’? Energy Advisor

As Queensland continues to grow, and we enjoy an increasing array of comfort and lifestyle appliances, we find ourselves using more electricity than ever before. It’s requiring Sharing our a massive investment in new infrastructure and, while we’ve been growing the electricity expertise network to keep up with demand, it has come p 43 at a cost. The challenge is not ours alone – we’re working jointly across our industry, with all levels of government, and with our customers to find the solutions to better manage demand and support Queensland’s way of life. To help us strike the balance, we’re adopting new technologies and smarter ways of doing things – we’re harnessing the expertise of our people right across the business, or as we like to say our ‘energy sense’. And we’re empowering our customers to use their ‘energy sense’ to manage electricity costs, all to deliver a brighter future for regional Queensland. This report explores the progress we’ve made over the past 12 months, and outlines the challenges that still lie ahead. So read on to see sustainability in action.

Cover: Driving down 1 2 3 4 5 6 7 8 9

demand 1, 2, 3, 6, 8, 9 Sheet Metal Worker Rob Brady discussing the plans for a modular switching room with Business Development and Customer Manager p 27 Marcus Leaver. Highlighted here, these solutions are significantly reducing the cost of establishing vital electricity infrastructure, and allowing us to respond rapidly to keep pace with demand (p 16-17). 4, 5 The customers featured in our ‘energy sense’ communication campaign, including the family and business shown here, are helping to highlight how we can all use electricity more efficiently and save on our power bills – as well as helping to engage the community on the challenges associated with peak demand (p 19). Jon Turner 7 Solar photovoltaic skins being fitted to a pole SWER Improvement Manager on Magnetic Island by Ergon Energy workers Sam Walters and Mick Eyles – one of many innovative technology trials under way to explore new solutions to meet the distribution challenges of the future (p 42). 2 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 2009/10 ABOUT ThisERGON REpORT ENERGY our Stakeholder and Government Relations team on 13 10 46. www.ergon.com.au/annualreport. You are also welcome to phone invite your feedback through our online Feedback Form at We aim to continue to improve our reporting and we sincerely on theCDatbackofthisreport information aboutspecificGRIindicators anindex isavailable to enhance thecomparability ofour reporting –to easily locate (GRI) G3Principles ofSustainability Reporting have beenused Practices Framework. Inaddition,theGlobal ReportingInitiative’s as well astheEnergy Supply Association of Australia’s Sustainable Australasian Reporting Awards criteria for best-practice reporting, The content ofthisreport hasalsobeenguidedbythe personal lives, byourindustry andbyotherstakeholders. and actionsthroughout the business, byouremployees intheir and encourages theadoptionofmore sustainable practices understanding with ourstakeholders ofourcommon objectives, and non-financialperspective helpsusdevelop ashared At Ergon Energy we believe thatreporting from bothafinancial given bythebusiness. in thisreport, butalsoultimately thestrategic prioritythey are business, notonly clearly guidesthemateriality oftheirdisclosure our stakeholders against thesustainability issues we face asa other stakeholder feedback loops. Assessing theconcerns of through ourcustomer research, internal employee surveys and and expectations, through in-depthinterviews, aswell as in thisreport, we continually reassess ourstakeholders’ needs To ensure our stakeholders receive the most insightful information our operations orcould effect ourabilityto serve ourcustomers. who asindividualsoragroup could potentially beimpacted by employees (includingrepresentative unions) and suppliers, regulators, industry associates, customers, communities, Broadly, ourstakeholders are ourgovernment shareholders, transparency and relevance ofourstakeholder communications. and balanced disclosures, we are continuously improving the In linewiththebest-practice governance principle oftimely WHY WerePOrTWHaT WeDO Meet best-practice corporate Enhance understanding of key sustainability issues reporting standards aBOuT OurrePOrT Pty Ltd, as well as commentary on our other subsidiaries and jointThis venture report (p covers 57). Ergon Energy Corporation Limited and itscontribution subsidiary Ergon to addressing Energy Queensland the broader sustainability issuesorganisation’s currently facing overall regional performance Queensland. for the financial year,Ergon and demonstrates Energy’s Ergon Annual Energy’sStakeholder Report 2009/10 presents a holistic insight into the . WHY WE REPORT WHAT WE DO

. DisasterManagement 6. ClimateChange Impacts 5. Reliability and SecurityofElectricitySupply 4. GrowthinInfrastructure Demand 3. Workforce Health&Safety 2. Affordability ofElectricity/ 1. MATERIALITY RANKING Potential impact on our business against the potential impact of these issues on Ergon Energy as a business. of our stakeholders, in the areas were we have a corporate responsibility, Although all complex issues, this matrix cross-references the concerns cOrPOraTe resPONsiBiLiTY MaTeriaLiTY MaTriX Financial Hardship LOW MEDIUM HIGH LOW NOT REPORTED 13 Concern ofOurStakeholders MEDIUM 7 8 13. Corruption and Anti-competitive Behaviour CorruptionandAnti-competitive 13. SocialProject Sponsorship 12. andInclusion/Indigenous Rights Diversity 11. &Development LocalEmployment 10. Environmental Impacts 9. CommunityHealth&Safety 8. Engagement Employee 7. 12 Transparency builds trust Opportunities improve performance Measure, publish and 10 3 5 6 11 and our reputation 9 24 1 HIGH along withacopy ofthisreport, can alsobeobtained onlineatergon.com.au/annualreport. or onourwebsite. Abbreviations andanindex are provided onpage71-72.Archived reports from previous years, Throughout thisreport, the LOOKiNG fOR mORE iNfORmATiON? cONTeNTs symbolisshown whenever additionalinformation is available, eitherontheattached CD How we’re enablingourpeople, aswell asinvesting inprocess and mAKiNGiTALLhAppEN Explains ourclimate changeresponses, from mitigatingourown LEADiNGwiThOURCLimATE ChANGEREspONsE Highlights strong community electrical safety outcomes. BEiNG‘ALwAYs sAfE’ Showcases thenetwork investment program andthevision. sECURiNGThENETwORK Details ourefforts to improve thebusiness’s operational efficiency ‘GETTiNGfiT’–impROviNG OUROpERATiONAL EffiCiENCY REviEw OfOpERATiONs ChiEf ExECUTivE’sREpORT ChAiRmAN’s mEssAGE ThE YEARiNsUmmARY ABOUT ERGONENERGY CORpORATE GOvERNANCE sTATEmENT OUR ECONOmiCpERfORmANCE systems improvement, to ensure we deliver ourstrategic vision. of initiatives underwayinvolving thebroader community. greenhouse gasemissions andadaptingournetwork, to thesuite of our‘live’ linework capability to ourfitness for work focus. Details ourresponse to workplace healthandsafety –from rebuilding preparedness to ourgrowing network monitoring capability. Looks atourreliability improvement efforts, from storm season lift service delivery performance and investment decisionsto minimisecustomer price impactsand 12 10 57 54 46 39 34 24 15 6 4 3 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 ABOUTCONTENTs This REpORT 4 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 ABOUT ERGON ENERGY Cape York, various Torres Strait Islands and Palm Island. electricity grid in western Queensland, the Gulf of Carpentaria, distribution networks, to supply communities isolated from the main We also own and operate 33 stand-alone power stations, with local Barcaldine, which supplies power into the state-wide electricity grid. Ergon Energy owns and operates a 55MW gas-fired power station in – with a very low customer density and largely radial profile. distribution technology known as SWER (Single Wire Earth Return) 65,000 kilometres of line utilises the limited capacity electricity of the network’s powerlines are considered rural – approximately kilometres of powerlines and one million power poles. Around 70% Our electricity distribution network has approximately 150,000 Our eLecTriciTY NeTWOrK has around 4,600 employees and a total asset base of $8.7 billion. sustainable energy solutions’. To make this happen, Ergon Energy economic and lifestyle aspirations of our customers through We are all about delivering on our purpose – ‘to enhance the Teamwork innovation respect integrity Professionalism safety Success isbuiltonourSPIRITvalues of: OUR VALUES sustainable energy solutions. aspirations ofourcustomers through To enhance theeconomic andlifestyle OUR PURPOSE customer-driven energy business. To beaworld-class, OUR VISION communities of outback Queensland and the Torres Strait. state of Queensland – from the expanding coastal and rural population centres to the remote customers across its vast operating area of over one million square kilometres – 97% of the Ergon Energy, as an electricity distributor, retailer and generator, services around 680,000 aBOuT erGONeNerGY 1. Estimate of length only. employees, government shareholders and other stakeholders. environmental and social contributionWe trust this report giveswe you a greater insightare into the economic, providing to our customers, for Natural Resources, Mines and Energy and Minister for Trade. Development, and the Honourable Stephen Robertson MP, Minister MP, Treasurer and Minister for Employment and Economic Our shareholding Ministers are the Honourable Andrew Fraser communities where we both live and work. is central to the sustainability of the regional Queensland electricity supply for regional Queensland. This responsibility energy distributor to provide a safe, dependable and sustainable retailer or from another retailer, it remains our priority as an customers are buying their electricity from us as their franchise throughout Queensland. However, regardless of whether our apply to all non-market domestic, rural and business customers the government set electricity tariffs (or notified prices) that we are unique in that we are only permitted to offer our customers As a government-owned ‘non-competing’ electricity retailer, Energy Queensland Pty Ltd, a ‘non-competing’ electricity retailer. Limited, as the electricity distributor, and its subsidiary Ergon principal operating companies are Ergon Energy Corporation distributors and their subsidiary retailer in 1999. Today the was formed from the six former regional Queensland electricity A Queensland Government-owned Corporation, Ergon Energy Our HisTOrY, OurcONTriBuTiON - Low voltage -Distribution - Highvoltage -Distribution - Highvoltage -Subtransmission Overhead Powerline Power Poles Distribution Transformers Major Power Transformers (33kVto 132kV) Zone substations Bulk supply Points Power stations employees Network area serviced customers Total Our sTaTisTics underground Power cable 1

1.7million km 20-25,000km 110,000km 15,000km 1 million 6,200km 680,095 90,500 4,630 2010 526 368 23 34 2 Burketown Our servicearea Gununa Camooweal Mt Isa Doomadgee Bedourie Birdsville Cloncurry Boulia Aurukun Mapoon Bamaga Georgetown Lockhart River Normanton Julia Creek Pormpuraaw Kowanyama Richmond Winton Coen Longreach NORTHERN Torres Strait Windorah Jundah Quilpie Cunnamulla Charters Towers Ravenshoe CENTRAL Mareeba Atherton Hughenden SOUTHERN Barcaldine Ingham Cooktown Blackall Thursday Is. Mossman Charleville Hammond Is. Badu Is. Cairns Mabuiag Is. Boigu Is. Tully Innisfail Springsure St George Moranbah Middlemount Dauan Is. Emerald Townsville Palm Island Pinnacle Wasaga, HornIs. Kubin, MoaIs. Roma St Lawrence Home Hill Clermont Wandoan Yam Is. Bowen Saibai Is. Theodore Stand-alone Power System stationpower Isolated Generation Barcaldine Power Station Depot/Workshop Distribution Network Key Service Centre Rockhampton Moura Yorke Is. Chinchilla Proserpine Mundubbera Stephens Is. Blackwater Warraber Is. Tara Mackay Sarina Millmerran Biloela Stanthorpe Toowoomba Kingaroy Proston Monto Coconut Is. Warwick Biggenden ® Yeppoon

Childers Murray Is. Gin Gin Gladstone Dalby Gayndah Torres Strait Darnley Is. Miriam Vale Murgon Yarraman Bundaberg Maryborough Hervey Bay Kilkivan Brisbane 5 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 2009/10 ABOUTABOUT ERGON ERGON ENERGY ENERGY 6 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 ThE YEAR iN sUmmARY na = not available due to data not being in a comparable form orFOR MOREINFORMATION not REFERTO PAGE recorded 24. in that year. 1. Estimate based on trend. 2. Queensland Household Energy Survey 2009 average useperhouseholdeven dropped –whatisimportant istheafternoon-evening spike indemand. network to keep upwithincreased demandfrom thisarea alone. Theelectricity they useisinitselfnotthemajorissue –thisyear Over thenext five years, ifthecurrent rate ofgrowth inairconditioning continues, over abilliondollars willneedto beinvested inthe An estimated 79%ofhomesacross regional Queenslandnow have airconditioning installed – andthetake-up iscontinuing to grow. eNerGY usaGe sNaPsHOT The first phaseofoverlaying aubiquitous − Theseevents demonstrated thesuccess ofour − Aspartofacommitment to work jointly withENERGEX, − Gainedregulatory approval for a $5.6 billion Met the growing demand for electricity with the − Our acHieveMeNTs Maximum Coincident‘Peak’ Demand Population ofErgon Energy’s Service Area Household AirConditioningPenetration Average Electricity UseperHousehold No. ofCustomers monitoring and network control capability network began,aspartofastrategy to enhance our telecommunication network across thedistribution management to disaster response planning(p29-31). summer preparedness efforts –from vegetation brought bysevere flooding across thesouthwest. Queensland coast inlate March andthechallenges the destruction thatCyclone Uluibrought to the showcased ourdisaster response capability following electricity distribution network (p 16, 26). a shared vision for the development of the Queensland our southeast Queenslandcounterpart –we developed determination period (p 18). capital program 2009/10 alone injecting $3.3 billion into the network, $674.9 million in completion of our five-year capital investment program – THe YeariNsuMMarY (p 24-25). for the coming five-year regulatory 2 (p 16-17, 29). s s s t s 1.50 ,2kh798W ,9kh7,882kWh 7,893kWh 7,978kWh 7,623kWh ,4M ,0M ,3M ,8M 2,380MW 2,584MW 2,333MW 2,406MW 2,542MW − Exceeded our profit commitment with a − 2009/10sawarewarding 30%drop inthenumberof − outcomes (p 53). efficiency and productivity, and at the same time improve customer new technologies to help make better investment decisions and improve entire network from the air. It is a great example of where we are adopting program (ROAMES), which progressed this year, will see us scan the Our Remote Observation, Automated Modelling, Economic Simulation 091 080 070 060 2005/06 2006/07 2007/08 2008/09 2009/10 1 8,9 6,0 5,4 3,2 622,417 637,325 653,640 667,502 680,095 mlin14 ilo .4mlin14 ilo 1.37million 1.40million 1.44million 1.47million million our Work Group Leaders setting new expectations around safe behaviours across address safety concerns (p 37). We have also invested in ‘live’ rebuilt our capability to work on the network while assets (p 54-56). Tax of$166.5million,anddelivered a5.7%returnon the industries most atrisk(p34-35). thanks largely to oursuccess partneringdirectly with electrical-safety related incidentsinthecommunity – 9 1 7 2 55%(2005) 62% 67% 71% 79% following a suspension put in place in early 2009 to (p 51). Net Profit after na FOR MOREINFORMATION REFERTO PAGES 54-56. 1. The 2006/07 results include a significant contribution from the sale of our contestable retail operations. FOR MOREINFORMATION REFERTO PAGES 15,20ANd25. FOR MOREINFORMATION REFERTO PAGES 15ANd25-31. 1. Definition used here captures a limited area of our operating expenditure (Customer Service, Meter Reading, Network Operation, Training) not inspection and costs, aswell assupportingcustomers infinancialhardship. conservation advice, to assist theminmanagingtheirelectricity At thesametimewe’ve beenproviding ourcustomers withenergy to have amajorfocus onoperational efficiency–on‘gettingfit’. this, andthecost ofkeeping pace withdemand,we’ve continued perceptions ofvalue around theservice we deliver. Inresponse to generally, are significantly impactingonourcustomers andtheir Electricity price rises,andtheeconomic environment more ‘GeTTiNG FiT’–iMPrOviNG OurOPeraTiONaL eFFicieNcY Total Assets Revenue Contact Centre – Calls Answered in 30 Seconds Operating Expenditure Interest Cover (times) Operating Profit Before Income Tax Contact Centre –Customer Satisfaction Workforce Utilisation Gearing (includingreserves) and Amortisation Earnings Before Interest, Tax, Depreciation Call Volumes to Contact Centre SCITarget Delivery ofNetwork Maintenance Plan Return onAverage Equity Earnings Before Interest andTax Value to Customer (research score) on budget) Priority Projects Delivered (ontimeand Contract to Commissioning New Connections–Average Timefrom Return onAverage Assets Net Profit After Tax FiNaNciaL raTiOs FiNaNciaL sNaPsHOT cusTOMer serviceDeLiverY OPeraTiONaL PerFOrMaNce maintenance of the network. 1 prCsoe SCI Target perCustomer SCI Target SCI Target SCI Target ≥ $94.7M ≥ $107.6 ≥ 95% ≥ 85% ≥ 7.1 s t s s s s s t s s s t t t s s t – – .5mlin14 ilo .9mlin1.47million 1.39million 1.45million 1.55 million 6 as15dy 173days 165days 162 days 8683$,1. 7105$,6. $6,298.0 $7,261.5 $7,100.5 $8,011.3 $8,698.3 2237$,7. 2583$,0. $2,246.8 $4,209.6 $2,598.3 $2,279.1 $2,203.7 091 080 070 2006/07 2007/08 2008/09 2009/10 2009/10 2005/06 2006/07 2007/08 2008/09 2009/10 2005/06 2006/07 2007/08 2008/09 2009/10 249$8. 200$,8. $213.0 $1,283.7 $230.0 $184.5 $234.9 792$8. 681$,8. $585.3 $1,789.0 $658.1 $685.7 $769.2 483$0. 401$,3. $345.2 $1,537.6 $410.1 $407.9 $478.3 165$2. 129$,9. $144.2 $1,198.1 $162.9 $129.3 $166.5 186$4. $132.1 $143.2 $108.6 98 91 43 06 45.1% 50.6% 54.3% 59.1% 59.8% in ourStatement of CorporateIntent (SCISummary agreed withourshareholding Ministers, are documented Ergon Energy’s performance targets for 2009/10, are discussed inmore detail throughout thereport. ofof other ourstrategicprioritieswitharange measures, These performance measures, highlighted here inthecontext .%51 .%4.%5.8% 47.7% 6.6% 5.1% 6.4% .%53 .%2.%5.9% 22.7% 5.7% 5.3% 5.7% 1 0 9 5 91% 85% 89% 90% 91% 73% 79% 81% 82% 7 0%17 0%109% 104% 107% 100% 97% 9 9 7 87% 27% 89% 79% 1 1 4 0 75% 70% 74% 71% 71% .x31 .x70 4.4x 7.0x 3.7x 3.1x 3.2x $M . . . . 7.3 7.9 8.0 7.1 7.0 2008/09 $M 2007/08 $M 2006/07 $M na na 1 1 p79). 2005/06 2005/06 $M na na na na na 77 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 ThE YEAR iN sUmmARY 8 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 Th i e yEAR n summary FOR MOREINFORMATION REFERTO PAGE 33. na =notavailable dueto data notbeing inacomparable form ornotrecorded inthatyear. FOR MOREINFORMATION REFERTO PAGES 34-38. FOR MOREINFORMATION REFERTO PAGES 24-25. has beendisappointing. leadership capabilities. While we have achieved significant improvements in community safety, workplace health and safety performance Ergon Energy hascontinued to target zero injurieswithinourworkplace andwidercommunity, withafocus onouroperational and B weather events. as well as making the network safer andmore resilient to extreme has beenonaddressing thedemandfor electricity at peak times, stakeholder expectations for asecure power supply. Thefocus network performance andmeetourcustomer andbroader This y SECURI Frequency Rate –Employees Dangerous Electrical Events – – Dangerous Electrical Events (DEEs) Average Cost of WorkCover Claims Employees Lost TimeInjuriesFrequency Rate – All InjuriesFrequency Rate Community El SA Electricity Generated byErgon Energy Electricity Distributed − LongRural Distribution − ShortRural Distribution − UrbanDistribution Frequency Index (SAIFI) − Long Rural Distribution − ShortRural Distribution − UrbanDistribution Dur ASSE Inv SECURI − ZoneSubstations − BulkSupply Substations Higher N-1SecurityLevel: Additional Transformer Capacity-ZoneSubstations Additional Transformer Capacity-BulkSupply Points EI Ergon Energy's control)  As Ergon Energy's control)  Unas NG ‘ F estment intheNetwork ation Index (SAIDI) E sisted Asset Failure (outside ear $674.9millionhasbeeninvested to continue to enhance T P TY P A NG TH sisted Asset Failure (within TY OF LW ER ER A FO Y FO E S ectrical Safety Incidents SU R N

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SCI Target 274 SCI Target 2.6 SCI Target 9.4 SCI Target SCI Target ≤980 ≤430 ≤150 ≤7.5 ≤4.0 ≤2.0 s t s t s s t t t s s t t t t t s s t s 568W 572W 557W 524W 15,208GWh 15,294GWh 15,547GWh 15,722GWh 15,678GWh and plannedoutages. our sixdistribution reporting categories, whichincludeunplanned Compared to last year there wasanimprovement across five of 19%, despite thisyear’s storm seasonbeingachallenging one. Since 2005/06,theduration ofunplannedoutages improved by operational constraints, network reliability isimproving. Despite notrealising ourtargets, dueto safety-initiated 649 711 738 606 $533.6M $660.6M $713.8M $741.1M $674.9M 091 080 070 060 2005/06 2006/07 2007/08 2008/09 2009/10 091 080 070 060 2005/06 2006/07 2007/08 2008/09 2009/10 091 080 070 060 2005/06 2006/07 2007/08 2008/09 2009/10 1Gh12W 7Gh19W 241GWh 199GWh 178GWh 112GWh 114GWh 1MA21V 4MA17V 180MVA 220MVA 157MVA 200MVA 146MVA 77MVA 231MVA 168MVA 118MVA 220MVA 275$,5 521$,0 $4,593 $6,606 $5,241 $3,359 $2,745 411. 12842.2 8.4 11.2 11.8 14.1 0 8 8 1 77% 45% 81% 48% 78% 57% 78% 57% 80% 70% .977 .066 9.57 4.96 2.26 6.60 3.71 1.82 6.40 3.49 1.85 7.73 4.93 2.33 7.19 4.58 2.25 0 9 8 3 905 631 780 695 500 9 4 6 7 363 378 363 342 394 0 3 8 8 586 584 588 439 309 4 0 5 4 593 1,331 219 957 448 172 1,030 457 179 1,108 609 217 999 544 222 . . . . 4.4 5.7 3.6 3.2 5.3 . . . . 0.5 2.0 4.3 4.1 5.3 FOR MOREINFORMATION REFERTO PAGES 39-45. FOR MOREINFORMATION REFERTO PAGES 47-52. 1. Equal Employment Plan 2007-2010 – baseline 2007. environmental compliance refer to page69. Cultural Heritage Incidents.For further discussions on Corporate Intent withnoClass 1Environmental and We alsometourcommitment intheStatement of commitment intheStatement ofCorporate Intent. accreditation in2009/10,accordance withour response, Ergon Energy has maintained AS/NZS ISO 14001 To supportandcomplement ourclimate change response (p39-45). the environment andbecome aleader inclimate change considerations into business decisions,to helpprotect initiatives, andincreasingly embedclimate change our business. Thishasseenusdeliver onasuite of a socialresponsibility andasanopportunityto strengthen Er L Clean Energy Customers solar photovoltaic systems) Capacity (isolated generation, Renewable Energy Generation Minimum Emissions Rating Vehicles NotCompliantWith – Tonnes ofCarbonDioxide Equivalent Building Electricity UseperEmployee – Tonnes ofCarbonDioxide Equivalent Fleet, AirTravel andElectricity Use Greenhouse GasEmissions from Gree Women inUpperManagement Staff Turnover (annualised) Index Empl Islander intheEntryLevel Positions Additional Aboriginal&Torres Strait Women in Middle Management O EA gon Energy isresponding to climate changeasboth UR D P I NG W oyee ‘Have Your SaySurvey’ nho E OPL use Gas I TH O E

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RES T I SCI Target ON PON SCI Target SE ≤ 43,297 ≥ 12 It’s all about providing a sustainable power supply at an affordable cost (p 27). and will see us working more closely with our customers to manage peak demand. their energy use. This active participation will change the nature of the network In the future new technologies will empower our customers to better manage s s t t t s t t t s ,6k 0k 7k 3k 533kW 533kW 577kW 804kW 1,160kW 091 080 070 060 2005/06 2006/07 2007/08 2008/09 2009/10 091 080 070 060 2005/06 2006/07 2007/08 2008/09 2009/10 5276,5 7755,9 37,026 51,698 57,795 61,458 65,277 3174,3 53941,082 45,369 43,835 43,137 .%66 .%1.%10.1% 13.3% 8.5% 6.6% 7.2% 9 0 1 18% 11% 21% 12% 20% 13% 19% 21% .346 .446 4.71 4.68 5.34 4.66 4.63 13 4 6 374 267 146 3 16 9 na 14 7 na 17 13 na na na na na 16 99 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 Th i e yEAR n summary 10 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 ChAiRmAN’s mEssAGE $5.6 billion in capital projects and $1.9 billion in maintaining and enough revenue over the next five years to invest approximately determination in May 2010. The determination allows Ergon Energy This process ultimately saw the AER make its final regulatory and the organisation throughout the year. and submission of these to the AER was a major focus of the Board plans and demand forecasts for the next five years. The refinement a comprehensive picture of our capital and operating investment for our regulated electricity distribution services, the AER required To set our revenue allowance, and effectively the price we charge interests of our customers. our distribution business is to operate and, ultimately, protect the It is the AER’s role to set service and price frameworks by which the next five-year regulatory control period. under the Australian Energy Regulator (AER) – and transition into The end of 2009/10 saw Ergon Energy move to price regulation MOviNG iNTO aNeWcHaPTer strong governance focus by the Board. These areas of our performance will both continue to receive a implement a drug and alcohol testing regime. program and re-energise our communications, as well as to improve our risk analysis capability, evolve our behavioural safety by our senior managers to lift our safety leadership capability, supported the rollout of a five-point response plan developed of the organisation’s safety systems and practices. The findings safety performance, the Board initiated an independent review In response to Ergon Energy’s below target workplace health and the record floods in the south west. destructive forces of Cyclone Ului in central Queensland and during our employees’ emergency management response following the On that note, I would like to acknowledge the professionalism of improvement going forward. ‘live’ work capability now reinstated, we will see a significant constraints. I am confident however, that with our high voltage has been, in the main, a result of the safety-initiated operating unfavourable to our Minimum Service Standards. This outcome The performance of the network for 2009/10 has been largely network reliability and workplace safety. faced many challenges this year, most notably in the areas of target Net Profit After Tax of $166.5 million. However, we have 2009/10, performing particularly well financially with an above Ergon Energy has delivered across its strategic priorities for resPONDiNG TO OurcHaLLeNGes cHairMaN’s MessaGe transform the electricity industry. and also the environment. It’s a future where we’ll see technology for the benefit of both our regional Queensland customers, Ergon Energy is in a unique position to influence the future, network functionalities. and network control capability, as well as to support broader the-art telecommunications needed to enhance our monitoring This three-year project will provide Ergon Energy with the state-of- across the distribution network – through our UbiNet project. overlaying an all encompassing telecommunication network This year significant progress was made in the first phase of in leading-edge technology. To support our strategic direction we’re also investing further sHOWiNG TecHNOLOGicaL LeaDersHiP management capability. and systems, as well as on building our forecasting and demand implementation of more innovative asset management processes Our vision for the future will also see a focus on the maintenance and optimising lifecycle costs. processes and delivery, as well as condition-based targeted investment outcomes. There will also need to be a focus on capital infrastructure portfolio to deliver more prudent and efficient This will require improvements to the management of our management excellence. has endorsed a growing strategic focus on achieving asset To help the organisation rise to the challenge, the Board TarGeTiNG asseT MaNaGeMeNT eXceLLeNce customers’ way of life. regional Queensland’s economic prosperity and to supporting our But we also know how critical our infrastructure program is to we’re making in the electricity network does come at a cost. for many of our customers and that the scale of the investment The Board fully appreciates that cost of supply is a key issue to the challenges before us – it’s about getting the balance right. personally committed to seeking smarter, more efficient solutions No matter what the outcome of the review is, however, I am the AER decision. process which is to seek independent review of certain elements of a result, we are currently availing ourselves of another step in the they did not give full regard to some elements of our proposal. As issues to consider in making its determination, we still believe that Nonetheless, while we recognise the AER had a large number of Ergon Energy is now committed to operating within these parameters. respond to thestate’s growing demand. of $72.2millionto invest innon-network opportunitiesto better operating the network. This process included securing anallowance and to ensure our relevance long-term as an organisation. sustainability challenges facing regional Queensland, customer-driven, to enable us to better contribute to tackling the This new operating environment will require us to be increasingly they will no longer be passive recipients of their electricity supply. active partners in managing their energy consumption and cost, As technological advancements enable our customers to become O o the Board, success operational efficiencies. minimising environmental impacts and achieving greater while collectively meeting customer supply expectations, introducing new technologies to improve network performance, These initiatives are part of a commitment to evaluating and cadastre database. activities through the improvements it will deliver to the state’s The initiative also supports state and local government resolution, predicting and pinpointing a range of assettechnology risks. to automatically detect and map powerlinecoming assets months, in high is exploring the use of the latest in program,remote sensing which will be utilised by our people in the Modelling,field in the Economic Simulation program (ROAMES). The technologyROAMES for Ergon Energy’s Remote Observation,The Automated partnership will initially provide the visualisation and data storage their product set. network and energy management requirements into the core of technologies, effectively allowing the integration of Ergon Energy’s unfettered access to Google’s spatial, mapping and 3D visualisation Google’s rapidly evolving capability. This will give Ergon Energy place an industry-first partnership to enable us to benefit from As well, in an even more exciting development, we have in over Google imagery. ecosystems to outage and network constraints data, now overlaid with numerous layers of critical information sets from sensitive Enterprise technology to support greater operational efficiencies, We have also this year been increasingly using Google Earth realise our vision for an intelligent network. support a range of sophisticated information technology needed to linked by a core telecommunication backbone by 2012, will also The $134.4 million investment, which will see our key facilities UR

CUS “

T and sustainable.” that is safe, dependable deliver an electricity supply management excellence to balance right… using asset It’s about getting the keeping the lights on. means more than just TOM ERS

ARE P AR T OFTH E

S OL U T I ON A both underperforming by our own measures and by our customers. better prioritise our efforts towards assets or services that are better understanding our different customer groups, we hope to behaviour and to targeting service delivery improvements. By Customer insights are also the key to understanding customer demand going forward. opportunities and incentives to manage their electricity peak how we can best provide our customers more broadly with The results of this work, and our residential trials, will tell us through to lower customer network prices. of dollars in infrastructure investment, which ultimately will follow customers. The outcome of these actions means a delay in millions contracted with a range of large commercial and industrial to date in excess of 20MVA of future demand reduction has been reduce peak demand on our network – in Townsville for example, working with the community and our customers with the aim to These initiatives and trials have seen Ergon Energy increasingly these efforts. Our growing demand management program is part of CHAIRMAN D the requirements of regional Queensland into the future. capability, and more importantly the resolve needed, to meet I have every confidence that we have the plans and the service to our customers. an important step towards delivering a more sustainable electricity Successfully delivering our strategic priorities this year has been support Ergon Energy for their contribution to this year’s results. I thank my Board colleagues and all of the people who work for and our people. It’s a future that will also require an ongoing investment in application of new, smarter solutions to the problems we face today. will no doubt continue to see rapid changes in technology and the It is an exciting time to be involved in the industry, a time when we P and to impact positively on carbon emissions. position to influence the way the industry operates in the future, with the challenges before it. I believe Ergon Energy is in a unique electricity industry, as the distribution model for electricity evolves We will be actively participating in what is happening across the associated with energy use. addressing affordability, as well as the climate change impacts an all round win, mitigating the need for costly infrastructure, Fortunately, our efforts to encourage energy conservation provides better manage and reduce their energy use. renewable energy sources and providing them with real choices to working closely with them to support and encourage their use of We are also leveraging customer concerns around climate change; network itself. are accountable for as an organisation, and also to adapt the this area. Our priority is to mitigate the emissions that we of the need to respond effectively and demonstrate leadership in to the sustainability concerns of many, and we are acutely aware The challenges associated with climate change are central U G r TT R REE alph I NG N ER I T C

A S raven LL M AR I NTO T

ER AC F U T T I ON URE

11 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 C HAIRMAN’S MESSAGE 12 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 ChiEf ExECUTivE’s REpORT much more than that, across our south west region it increased a summer peak’ has increased by 13% – and in many areas it was In that same period overall maximum demand or ‘coincident 270 new houses, units and businesses every week. connected to the Ergon Energy network – that’s more than Over the past five years an additional 71,130 customers have We’ve iNvesTeDiNsecuriTYOF suPPLY meet demand, security and reliability standards. for will enable us to invest more in the network than ever before to Despite the constraint imposed, the revenue the AER has allowed management and asset maintenance. proposed above our current levels, in areas such as vegetation issue with our load growth forecasts and the operating activities all of our proposed business-as-usual expenditure, only taking revenue for the next five years. In doing so the AER allowed almost took in May this year when they determined our distribution recognised by the position the Australian Energy Regulator (AER) Our efforts to improve efficiency and productivity were also Return on Assets of 5.7%. gained, we have been able to reverse the trend and achieve a trend in our Return on Assets. However, through the efficiencies had a relatively stable revenue stream – this has seen a downward investment into the network, however, at the same time we have pace with demand, over recent years we have made a massive They are also improving our financial performance. To keep better outcomes for our customers. As well as delivering savings, these initiatives are delivering standards around network planninganddesign. now have a shared Network Vision, as well as increasinglyworks planning common and targeted joint procurement. Throughgains through reduced this duplication work of investment,we improvements to Our Joint Workings program is on track to realise relationshipsignificant efficiency with ENERGEX, our south east Queensland counterpart.We have alsomadereal progress around ourcollaborative with noteworthy success in our vegetation management program. another example, to opportunities for greater efficiency in the field, design of our organisation itself, to our investment decisions and, as on the overall price our customers pay has seen us look to the Our commitment to mitigating the cost impact our operations have the priority we have placed this year on ‘getting fit’ operationally. Queensland’s economic success. This understanding has driven directly impact our customers’ lifestyle choices and even regional As a business we are fully aware that the price of electricity can GeTTiNG FiT–DeLiveriNGOPeraTiONaL eFFicieNcies rePOrT cHieF eXecuTive’s keep pace with demand. $3.3 billion network investment program undertaken largely to operational efficiency. It also brought to completion a five-year 2009/10 has seen us place a strategic priority on improving our reliability of the network is improving. associated with specific Air Break Switches – the underlying initiated suspension of ‘live’ line work and operating restrictions standards for the last two years – largely a result of the safety- While the network’s performance has been unfavourable to these reliability targets. as our regulator, has seen us face increasingly challenging framework established by the Queensland Competition Authority Over the past five years the minimum service standard iMPrOviNG POWer suPPLY reLiaBiLiTY promotion of off-peak tariffs. Queensland already has under dynamic control through the These initiatives complement the substantial load that regional now been incorporated as an explicit part of the planning process.other SWER systems. Demand management alternatives have also demand. We’re now on the way to replicating this success inin four Cloncurry, which is now achieving a 20% reduction in peak our Single Wire Earth Return (SWER) demand management program peak demand on our network. A highlight has been the first phase of big and small, on initiatives and trials that are aimed at reducing This has seen us working increasingly with our customers, price increases. term capital expenditure required and assist in mitigating related use. We believe this non-network approach will reduce the long- with our customers to help them better manage their electricity In parallel with our capital works program, we have been working WOrKiNG TOGeTHer TO MaNaGe DeMaND sites following the loss of a single system element. infrastructure, so that supply can be maintained at our major The investment also lifted the security levels of existing critical from the perspective of security of supply. This was the last remaining section of network that we considered $100 million program of works aimed at keeping pace with growth. bulk supply substation was constructed in Mackay as part of a invested in critical infrastructure in Wide Bay, and this year a new Cairns worth $42 million boosted supply by 20%, $72 million was north, to Kearneys Springs in the south. A new substation in north Major construction projects were undertaken from Bamaga in the Ergon Energy injected $3.3 billion into the network. In response, during the five-year regulatory period just completed, grow by a further 1.5 units over the next five years. an average saturation of 2.7 units per household this is expected to household. This trend is expected to continue; where there is now also jumped from 55% to 79%, along with a jump in units per massive 25%. The penetration of air conditioning into our homes broadly with a commitment to purchasing electricity from a We also continued to support renewable energy generation more reliance on diesel fuel for generation in our isolated communities. During 2009/10 we have continued our strategy to reduce our A leader in safety. the objective we have set ourselves – to once again be an industry a plan that encompasses the whole organisation, will deliver on Management Plan that we have developed to take us forward, I am confident this approach, and the comprehensive Safety to obvious things like routine equipment testing. the fundamentals are being addressed, from regular safety meetings the Chair, our response has seen us go back to basics, ensuring that safety performance. In addition to the five-point plan, mentioned by recent years has been Ergon Energy’s declining employee health and In contrast, the most disappointing area of our performance over on the previous year. This is a fantastic result. related Dangerous Electrical Events are down more than 13% industries, road and transport. In line with this, overall asset improvement this year to come from one of our most ‘at risk’ number of electrical-safety related incidents – with the greatest commenced in 2007/08, there has been a 45% reduction in the Since our Community Electrical Safety Awareness Plan I e have delivered significant infrastructure that is remotely monitored and controlled. next two years, the latter will see 90% of customers supplied by Supervisory Control and Data Acquisition program. Over the million telecommunications project and the acceleration of our under way of our network control capability – through our $134.4 comprehensive programs in Australia, to the major upgrade defect remediation program, one of the most onerous and improvement – from our comprehensive asset inspection and We now have significant strategies in place to drive performance management excellence will see us rise to the challenge. reliability performance, I believe our focus on building our asset While I recognise more needs to be done to address our planning paid off and our people shone through. our territory were affected, however, our summer preparedness and Cyclone Ului on the central coast. In both cases large areas of major events – the biggest flooding on record in the south west, to natural disasters. In the past year, our people dealt with two We have also continued to demonstrate our ability to respond positive outcomes in other measures, such as our pole failure rates. this year’s storm season being a challenging one. We have also seen the duration of unplanned outages has been reduced by 19%, despite This year’s results show that since 2005/06, over the five year period, N P CREASE R OM “ ISI promising results.” projects are showing and demand management and our energy conservation of increasing demand… secured supply in the face operational efficiencies, W D NG A W RES ARE PON N ESS SE TO

I N C C OMM L I M A U T N E

I C TY H A SA NG F E E

TY O us, the environment and, ultimately, our customers. strategic collaborations, we believe we can make a difference for challenges are significant; however, through persistent effort and around one-third of Australia’s greenhouse gas emissions. The We recognise our responsibility in an industry accountable for baseline to enable us to make informed decisions in measurementsthe future. and reporting means that we now have anwith accurate our own greenhouse gas emissions. Our investmentImportantly in accurate we are now also aware of the size of the challenge we face sound position for the future. Poles Project, which places us in an environmentally and financially for forest management, as part of our Australian first Sustainable The past year also saw the acquisition of two additional properties sphere through the addition we are continuing to break new ground in the solar energy on benefits to the people of Mackay and the local sugar industry. In underpins the plants construction, which creates significant flow- This commitment will build on our clean energy portfolio – it also planned $120 million co-generation plant at the Mackay Sugar Mill. CHIEF EXECUTIVEOFFICER IAN M that we have developed the platform to succeed. development of a new paradigm in energy supply and I am confidentthis point in its history. I believe we have a critical roletheir to playpassion. in the I feel fortunate to be at the helm of the businessteam at and the people of Ergon Energy for their support, expertiseIn closing,and I would like to sincerely thank the Board, my management outcomes for our customers. the tools to achieve greater operational efficiencies and better our employees to make better decisions and, ultimately, providing down the technology road, improving the information available to To better support our people we have also continued our journey in the National Diversity at Work Awards. Torres Strait Islander people, also saw us recognised as a finalist with developing employment opportunities for Aboriginal and management. Our focus on diversity in the workplace, specifically a major boost to the representation of women in senior A highlight of the changes has been that they have supported strengthen our governance and leadership capability. process changes. This has brought together ongoing efforts to organisation design, with significant structural, system and In 2009/10 we also reached a milestone in delivering a new remaining in Brisbane. Townsville and two in Central Queensland, with only three through the establishment of an executive team of four in shifting our executive decision making to regional Queensland Another highlight of our customer-focused journey has been Energy Ombudsman Queensland came from our customers. customers, only 3% of the complaints that were managed by the electricity services to a third of all Queensland electricity the industry. A highlight of this year was that, despite providing consistently benchmark well against other organisations across Our people’s focus on being customer-driven has seen us UR P c E LEOD OPL E M A K E Townsville: Queensland Solar City TH E D I FF ERE N CE

project. 13 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 Chi ef ExeCUTive’s report 14 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 REviEw Of OpERATiONs Group Manager Alternative Energy Solutions Tony Pfeiffer “ Considering alternatives to the challenge of growth” solutions to better respond embedding new, smarter planning process. We’re is now a key part of our MAKING IT ALL HAPPEN ...... 46 ...... LEADING WITH OUR CLIMATE CHANGE RESPONSE 39 ...... and safety –from rebuilding ofour‘live’ linework capability to ourfitness for work focus. Highlights strong community electrical safety outcomes. Details ourresponse to workplace health BEING ‘ALWAYS ...... SAFE’ ...... 34 ...... from storm seasonpreparedness to ourgrowing network monitoring capability. Showcases thenetwork investment program, andthevision.Looksatourreliability improvement efforts, ...... SECURING. . . . 24 .THE . .NETWORK ...... customer price impactsandliftservice delivery performance. Details ourefforts to improve thebusiness’s operational efficiencyandinvestment decisionsto minimise ‘GETTING FIT’ – IMPROVING OUR OPERATIONAL EFFICIENCY 15 ...... improvement, to ensure we deliver ourstrategic vision. How we’re enabling ourpeople, aswell asinvesting inprocess andsystems emissions andadaptingournetwork, to thesuite ofinitiatives underwayinvolving the improvement, to ensure we deliver ourstrategic vision. How we’re enabling ourpeople, aswell asinvesting inprocess andsystems broader community. emissions andadaptingournetwork, to thesuite ofinitiatives underwayinvolving the Explains ourclimate changeresponses, from mitigatingourown greenhouse gas revieW OFOPeraTiONs along with our efforts to make it all happen, were: Our key strategic priorities for 2009/10, ......

Embedding Embedding

solutions smarter smarter 46 ‘ OP G shows customers continue to put a value on cost/affordability, compared to a pool of four comparative suppliers. The V2C score months to June 2010, Ergon Energy performed highest overall worth noting, however, that in our latest results for the six economic environment and the rise in electricity prices. It is below the target of 7.1, due to the ongoing effects of Queensland’s For 2009/10, the overall V2C score was 7.0 out of 10. This was tool for maintaining the business’ focus on our get fit priority. focus on what is important to our customers and has been a key in terms of what they receive versus the price they pay. It helps us (V2C) metric. This research looks at how customers judge value perception of the value of our service, is our Value to Customer The main measure we use for monitoring our customers’ PL ecognising the importance taking the necessary steps to keep these to a minimum. minimising the customer price impacts of our operations and expectations. It has seen us focus on understanding and along with prudent investment, as critical to meeting customer coming from across the board, we see ‘getting fit’ operationally, In this environment, with cost pressures on electricity tariffs retail costs. associated with electricity generation, as well as an increase in In addition to this investment, there has been a rise in the costs regulator has endorsed a capital investment of $5.6 billion (p 18). up with demand, and for the next five years the national electricity has injected $3.3 billion into the network (p 24-25) largely to keep distribution network. Over the past five years, Ergon Energy alone of the ongoing investment into Queensland’s transmission and Authority (13.29% from 1 July 2010), largely reflects the scale (or notified prices), announced by the Queensland Competition The most recent price rise to the government-set electricity tariffs D This understanding is driving the priority we have placed on ‘getting fit’ operationally. impact our customers’ lifestyle choices and even regional Queensland’s economic success. business; and for many, it can be a significant expense. As a result, electricity prices can directly Electricity is an imperative in the daily lives of our customers, whether in the home or operating a E ACI M E A customer-driven business. of our goal to be a truly ‘getting fit’ is at the heart customers, our focus on of affordability to our R ND FO NG TT ERA A P R RI

E O L I RI EC NG F TY ON T RICI T TY D I CUS ON TOM RIVES I ER

T’ – I

A N VA VES L UE L TM

E NT E I MP FF ICIE R O storage to service toilets, a wash down bay and irrigation for garden areas. friendly facility features sensor lighting for energy efficiency and rain water our capability to respond to customers’ supply issues. The environmentally separate sites - it is significantly improving our operational efficiency and Ingham operations to the one site for the first time – replacing three The new state-of-the-art depot at Ingham brings together Ergon Energy’s used thisyear for Operating Expenditure perCustomer, which, more timedirectly attending to customer needs.Ourmeasure where anumberofinitiatives have allowed ourstaff to spend improvement achieved inworkforce utilisationisagreat example and real improvement across ourcustomers’ experience. The success, to ensure ourgetfitinitiatives achieve bothsavings to oureconomic performance indicators to helpusgaugeour We are now usingnumerous measures, from project delivery the necessity for travel. contractor costs, andcommunications technology to helpreduce This hasincludedleveraging works delivery outcomes to reduce telecommunications, achieving anotable reduction incosts. around travel, entertainment, contractors/consultants and Attention onreducing discretional expenditure alsocontinued our financialcommitments (p54-56). efficiency deliverables for 2009/10–allwere key to delivering on vegetation managementprogram (p31)were themost notable (p 47),JointWorkings initiatives (over) andimprovements to our The Organisation DesignReview (p47),theDepot3PRinitiative last year aswe continued ourefforts to ‘getfit’. These savingsfollow onfrom the$30millioninsavingsachieved 2009/10 through ourefforts to improve efficiencyandproductivity. More than$18millionhasbeensaved onsupportcosts during G corporate social responsibility. experience with us, and our performance against clear areas of the dependability of the electricity supply, the interaction they VI E TT N I NG F NG O C I T Y REA P S

RE UR W AR D S

15 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 Ri ev ew of Operations 16 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 Ri ev ew of Operations our southeas − − − − − − good progress over 55different initiatives across: running collaborative relationship into business-as-usual with demonstrated theabilityanddesire to develop ourlong- productivity through theJointWorkings program withE Looking forward we willfurtherimprove efficiencyand C Review Committees (p63). Opportunity Review Forum to complement theInvestment This focus hasbeenreinforced bytheestablishment ofan against thestrategic prioritieshave alsobeendeveloped. commercial supportpersonnel to weigh abusiness proposal integrated. Mechanismsfor thebusiness’s asset managers and asset investment plan,theoverall program ofwork ismore established, andthe‘Asset Manager’now accountable for the the new Strategic Asset Managementbusiness modelnow the changesare alsoimproving investment decisions.With review, thesystem andprocesses improvement associated with In additionto theefficienciescreated bytheorganisation design demonstrating theseefficienciesinaction. is alsoimproving –thisyear’s result wasdown 24%to $108.6– although only capturing alimited area ofouroperating costs, − s a OLL W have alsobeenaligned. maintenance policyandcondition monitoring strategy strategy, vegetation managementstandards, network asset performance andcost goals.Our strategic spares developed for defect prioritisationto supportoursafety, Maint a common asset managementframework. development ofthecapital works program (p27)with a risk-basedapproach hasbeenestablished for the and thedesignconstruction ofpubliclighting. and metering, majorplantandcable specifications, modular substations (seeover), electricity connections around theconsistency ofourapproach for thedesignof Building bl major customer connections. common approach to load forecasting, plantrating and planning standard hasbeendeveloped, along witha transparent approach to thedemandchallenge acommon Demand gr to legislative engagement. greater collaboration into thefuture, from jointresearch distribution network. Thislaysthefoundation for even view for thedevelopment oftheQueenslandelectricity (p 26)hasbeendeveloped, providing along-term strategic Netw Resource Planning system, Ellipse. and program development withinourshared Enterprise program have beenalignedto assist inresource planning and theoptimisationofinventory levels. are already beingrealised through reduced inventory returns improved supply chainoutcomes. Logistics improvements were developed to enable targeted jointpurchasing and trategic procurement andlogistics –guidelinesandmodels sset managementplanningandworks optimisation– A orks management–themilestones usedinourworks BO ork performance –ashared Network Visionto 2030 enance andrenewal –common manualshave been RA T t Queenslandcounterpart. To date we have clearly I NG FO ocks andstandards –progress hasbeenmade owth anddevelopment –to supportamodern R TH E GOODOFQ UEE N S L A ND n ergex , r D E H S Y CASE future deployment of sophisticated network monitoring technologies. a wider network across the Southern Downs region that will allow the The Mount Kent telecommunications hut and radio tower will be part of effective solutionfor ahigh-priorityproject atKatherine. Northern Territory Power andWater Corporation, asacost- contract to supply amodularswitching room interstate, to the including E commercial opportunitieswithanumberofindustry clients, Our modularsolutionsare alsobehindoursuccess increating network monitoring andremote control capability. secure telecommunications, to dramatically liftour Operational Control Centre, through faster andmore substations, depotsandoffices. Thiswillenable our When complete in2012,UbiNetwilllinkErgon Energy’s rapid on-site commissioning. aimed atdelivering cost-effective, qualitycomponents for our region, are beingbuiltusingmanufacturing techniques The huts,whichare now beingtaken onebyto sites across was successfully installed onMountKentsouthofToowoomba. standardised, high-tech modularcommunications node– the first ofthetelecommunications huts–effectively a In June2010,along withthefirst telecommunications tower, or ubiquitous, telecommunications network – UbiNet. projects, the roll-out of a $134.4 million all-encompassing, phase of one of Ergon Energy’s most ambitious infrastructure to build more than 40 telecommunications huts for the first This year, our Brisbane-based workshop began a major program to deliver efficiencies. Ergon Energy’s network, aswell asbyourindustry clients, ‘huts’ andsubstation switching rooms, are beingusedacross These solutions,includingmodulartelecommunications important role indelivering ourcapital works program. Standardised, modularsolutionsare now playingan T F E

S A T F L U D nergex N I P CIE S andPowerlink. Thishasled to thefirst

A TO D N C D IES I SA E L T I VER I O N

The growing expertise ofourmanufacturing − Asthesingle biggest internal contract − modular communication huts, substations and – sUsTAiNABiLiTY iNACTiON rapidly to keep pace withdemand. establishing vitalelectricity infrastructure, andallowing usto respond Marcus Leaver. Thesesolutions are significantly reducing thecost of switching room withBusiness Development andCustomer Manager Sheet Metal Worker discussing RobBrady theplansfor amodular with peak demand at a reasonable cost. we need to deliver the infrastructure necessary to keep up energy needs. Together with our electricity industry clients, efficient solutions to supplying the community’s growing One of Ergon Energy’s key challenges is to find more THe cHaLLeNGe revenue streams. is supportingefforts to establish alternative operations, anditstrack record ininnovation, solutions can play. is demonstrating theimportant role modular telecommunications hutsfor ourUbiNetproject undertaken, theroll-out ofmore than40 and dramatically reduce delivery times. cost of establishing vital electricity infrastructure, other components, can in some cases halve the Marcus Leaver “ Modular solutions bring

both internal and external.” customers’ expectations, it’s all about meeting our greater quality control… down the costs and provide Business Development and Customer Manager Delivering Delivering solutions smarter smarter 17 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 REviEw Of OpERATiONs 18 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 Ri ev ew of Operations the network over 2010to 2015. capital projects and$1.9billioninmaintaining andoperating determination willallow Ergon Energy to invest $5.6 billionin make itsregulatory determination inMay2010.Theregulatory public consultation andreview, andultimately sawtheAER focus onoperating prudently andefficiently. Thisprocess included customer electricity demand–aswell asademonstration ofour the majordriver behindtheseplanswasindustrial anddomestic Our submission includedcomprehensive plansandforecasts – are reasonable andtheinterests ofourcustomers are protected. AER to ensure that,asamonopoly service provider, ourcharges regulated distribution services are governed andapproved bythe under theNationalElectricity Rules. Theprice we charge for our tariffs, aswell asprices for otherregulated distribution services is responsible for theoversight andapproval ofournetwork Queensland. TheAER,asErgon Energy’s new economic regulator of customers whohave entered thecontestable market inregional network tariffs billed to bothourown retail business andretailers electricity distribution network. Thisrevenue isrecovered through with theaccess andsupply ofelectricity to customers onour Ergon Energy’s mainsource ofregulated revenue isassociated customers from 2010to 2015. the revenue necessary to deliver distribution services to our submission to theAustralian Energy Regulator (AER)to secure A majorf D − we can stay on top of the costs. it is important that we all use electricity sensibly so that as a community is that, although we understand that electricity is central to our lifestyle, One of the main messages from our ‘energy sense’ educational campaign i E T application offuture technologies (p50). Strategy wasalsodeveloped to provide aframework for the Solutions wascompleted. Ashared Network Technology Information Officer functions)to ourjointventure SPARQ of functions(formally exercised byeachcompany’s Chief streamline jointICT arrangements, thetransition ofanumber ER nformation and M I ocus for theyear, andourgetfitinitiatives, wasour N A T I ON SE T C S ommunication Technology ( O UR F U T URE

REVE N UES IC T) –to further Cus delivery experience. alone are only effective withreal improvement across ourservice looks athow we are assisting ourcustomers –because savings This iswhytheremaining content ofthissectionthereport service delivery andfor usto beatruly customer-driven business. these changeswillrequire continuous improvement inouroverall this inthetake-up ofsolarenergy (p42).We appreciate that managing energy consumption andcost. We are already seeing recipient oftheirsupply, butexpect to have more choices in with usasanorganisation. They willnolonger beapassive The future willseecustomers more engagedonaregular basis close partnerships withourcustomers to address successfully. especially growing demandanditslinkto affordability, willrequire in recognition ofthefact thatthemajorchallenges thatwe face, LOOK while alsomaintaining thefocus onourefficiencyprograms. new technologies into thenetwork to non-network alternatives, customers’ growing demandsfor electricity, from embedding In response we are keen to fast track smarter waysto meetour the scale oftheinvestment we’re makingcomes atacost. understand thataffordability isakey issue for ourcustomers and While we continue to question someelements oftheoutcome, we rapidly-growing regional Queenslandfor thenext five years. has beenfinalisingitsplansto meettheelectricity demandsofa Since therelease oftheregulatory determination, Ergon Energy tomer engagementisacentral plankofourstrategic plan– I NG FO R W AR D TO A

CUS TOM ER -D RIVE N F U T URE Solar Cityprojectthe ongoingSolar underwayinTownsville (p43). the Energy Savers Project inMountIsaandNorthMackay(p44), challenge has alsobeencentral to initiatives suchasthe Community engagementontheenergy conservation registered to usethispaymentoption. debit in2008,approximately 6,500new customers have payments. Sincepayments. Since Ergon Ergon Energy Energy beganpromoting beganpromoting direct direct perspective,perspective, byallowing byallowing weekly, weekly, fortnightly fortnightly andmonthly andmonthly their electricitytheir electricity billsfrom billsfrom abudgetingor aconvenience abudgetingor aconvenience – theseoptionshelpourcustomers better manage Direct debitfor billpaymentis also beingpromoted is provided aspart oftheelectricity bill(seeover). what they are using to others intheirregion, comparison, whichallows customers to compare residentialresidential customers customers since since August August 2009.Theusage 2009.Theusage Bill benchmarkinghasalsobeenprovided to September thisyear. ‘Unplugged’ isready to begininTownsville in 395 schoolshave participated. Anew production Council. OverCouncil. Over thepast thepast three three years years 55,000children 55,000children in in a highlya highly successful successful partnership partnership withQueenslandArts withQueenslandArts production TheAdventures of Watty andVolt, delivered through conservation message through theaward-winning theatrical students across Queenslandcontinued to receive theenergy most efficientuseofairconditioners. Andprimaryschool We alsocontinued our‘Aircon Smart’messages –around the specific industry segmentsfor useinfuture communications. from theauditswillbeusedto buildusageprofiles for energy savingrecommendations. Theinformation gathered energy auditsandfor thefundsavailable to implement the sense campaign –withacompetition beingrunfor free Small business customers are alsopartofthenew energy and that‘it’s anexpensive exercise’. more into buildingtheinfrastructure thatdelivers electricity; that to keep pace withgrowing demandwe have to invest during peaktimes.We wantourcustomers to understand Queensland’s increasing usageincheckoverall, particularly bill, italsoexplains how cuttingconsumption willhelpkeep helping ourresidential customers managetheirown power Although thiscommunication strategy islargely targeted at Energy SenseGuideandonourwebsite. advice to reduce energy useinacomprehensive printed advertising, aswell asproviding practical tips,tools and includes television, cinema,outdoorandnewspaper – ‘energy sense’.Theongoinginvestment inthecampaign in Aprilwe launchedanew educational mediacampaign help themuseless electricity andsave ontheirpower bills, To helpengageour customers around thechallenge and We’re sHariNGOur‘eNerGY seNse’ projectpowersavvy in the Cape and Torres Strait (p 41) and NeiGHBOurs’? cOMPare TO YOur ‘eNerGY seNse’ HOW DOes YOur case sTuDY willing to work with us. we also want our customers to be more engaged and associated with the growing demand for electricity, climate change. As a business, to address the challenges electricity affordable and play their part in responding to to take greater control of their energy use, to keep Our customers increasingly want to be empowered THe cHaLLeNGe region andwhetherthey are above orbelow theaverage use. their electricity usecompares to otherhouseholdsintheir with anextra pagewiththeirelectricity billthatdetails how Since August last year, we have beenproviding ourcustomers Asthefirst electricity retailer inAustralia to offer − electricity billsofthefuture. to introduce billbenchmarkingasafeature on helped inform thefederal Government’s decision the comparison for customers, thecampaign has for us,ourcustomers andtheenvironment. receiving theirbillbenchmarkingpage–that’s good The aimofthebillbenchmarkingcampaign has The aimofthebillbenchmarkingcampaign has been to engagewithourcustomers byproviding a been to engagewithourcustomers byproviding a benchmark oftheirelectricity useandto offer tips benchmark oftheirelectricity useandto offer tips to reduce theirconsumption andelectricity costs. to reduce theirconsumption andelectricity costs. And we are happyto say ourcustomers’ interest And we are happyto say ourcustomers’ interest has exceeded expectations! has exceeded expectations! their householdenergy useafter This comparative exercise is just one tactical This comparative exercise is just one tactical indicated they hadtriedto reduce indicated they hadtriedto reduce − 20%ofourcustomers surveyed − 20%ofourcustomers surveyed sUsTAiNABiLiTY iNACTiON element of our overarching energy element of our overarching energy ‘energy sense’. ‘energy sense’. aim to build on our customers’ aim to build on our customers’ other communications that other communications that conservation and demand conservation and demand are now helping to develop learning opportunities that It has provided significant management strategy. 19 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 REviEw Of OpERATiONs 20 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 REviEw Of OpERATiONs GuaraNTeeD serviceLeveLPaYMeNTs FOr serviceFaiLure being operationally ‘fit’andusingresources appropriately. delivering consistent andacceptable waittimesfor ourcustomers, This result reflects efforts to getthebalance rightbetween 30 seconds wasachieved, withanoverall result of71.2%. The Grade ofService target of70%calls answered in challenging storm season. satisfaction rating –witha95%highjust priorto whatwasa has shown apositive trend throughout theyear, averaging a91% Overall customer satisfaction withgeneral telephone enquiries cusTOMer servicesaTisFacTiON sTrONG as itwasdiscovered and4,534GSLpaymentswere paid. or unmetered securitylighting.Theerror wasrectified assoon was dueto anerror inthebillingofwatchman lighting, The significant jumpseeninRetail Billingrelated GSLpayments as mandatory paymentsbecome automated. (see below) –we anticipate thesepaymentswillrisein2010/11 around ournetwork related commitments are down thisyear focus ontheimpactsofservice failure. However, althoughclaims has already improved customer data qualityandsharpenedour as well asestablishing thesystems andprocesses required, made aclaim.Buildinginternal awareness ofthesechanges, appointments, paymentswere only processed whenacustomer order driven commitments like connections, disconnections and to deliver onthesecommitments. Previously, otherthanservice As ofJuly 2010,paymentswillbemadeautomatically ifwe fail Guaranteed Service Levels (GSLs)are notmet. of interruptions. Ergon Energy payscustomers iftheseorother notification ofplannedinterruptions, andfrequency andduration areas ofourCustomer Charters thisyear, inparticularthe There’s beenamajorimprovement focus across thekey service GuaraNTeeD serviceLeveLsNOW auTOMaTeD and extreme weather events (p29-31). network bore thefullbruntofanumberoperating constraints year ispleasing –most notably itsconsistency with2008–asthe customers’ supply expectations. Thisresult for the2009calendar largely positive witharound 68%ofournetwork performing within perception ofregional Queensland’s electricity supply remains Ergon Energy’s customer research shows that thereliability eXPecTaTiONs OFTHeNeTWOrK areBeiNGMeT TOTAL Guaranteed Service Level –Retail Billing Guaranteed Service Level –Network sCORECARD CUsTOmER sERviCE departments from throughout Australia. owned Corporations, not-for-profit organisations andgovernment excellence from amongcompanies smallandlarge, Government- of theyear. Theawards assess andreward thebest ofservice Manager Rowan Tew, whowasnamedCustomer Service Leader was alsoachieved byTownsville-based Purchasing andInventory Service Excellence Awards inOctober 2009.Personal success category for thesecond successive year attheNationalCustomer This follows success inwinningtheState andFederal Government Rockhampton andBiloela. a desktop auditandsite visitsto operations inTownsville, at 7.5outof10.Thisresult follows recertification inJunewith the top 5%oforganisations certified to thestandard globally – International Customer Service Standard (ICSS) rating within Ergon Energy hascontinued to sustain itsbest-practice cONTiNuOus iMPrOveMeNT recOGNiseD 64%, while satisfaction withthemanagementofclaimswas81%. At the end of the year, satisfaction with complaints management was Handling (ASISO10002). in conformance to theInternational Standards onComplaints resolving complaints. Theauditalsoranked Ergon Energy highly high riskcomplaints andthelevel ofexcellence intracking and customer service teams are havingwiththeearly identification of and procedures inMarch 2010also recognised thesuccess our An external auditofourComplaintsManagementprocesses them to seekexternal assistance. resolved internally withinErgon Energy, withouttheneedfor to listen to ourcustomers andensure thattheirconcerns are customers. Thispleasing result isinlinewithacommitment the Energy OmbudsmanQueenslandwere escalated byour electricity customers, only 3%ofthecomplaints managedby Despite providing electricity services to athird ofallQueensland POsiTive BeNcHMarKFOr cOMPLaiNTsMaNaGeMeNT customers calling for power outage information. critical business system continues to meetthegrowing needsof our faults Interactive Voice Recognition (IVR)system to ensure this to assist thecustomer. We alsorefreshed thetechnology behind information atourCustomer Service Representative’s fingertips customers to choosefrom onthegeneral enquiriesline,andthe release enhanced theself-serve transactions available for our the SelfServe Project wasimplemented inOctober 2009.This To enhance ourcustomer service capability thefirst stage of GLs claims 5,376 4,555 821 GsL Payment $229,341 $182,111 $47,230 to 1.5%ofcustomers. of customers beingdisconnected for non-payment–from 1.7% practices and processes, have seen a 10% reduction in the number These efforts, along withotherchangesincredit management support intheform offinancialcounselling. those whoare facing genuinefinancial hardship to gainadditional Lifeline CommunityCare Queensland alsocontinues enabling automatically –makingiteasierto budget.Adirect referral to payments from Centrelink to paytheirbillsinsmallamounts method. Thisallows people whoare receiving income support – seeingasignificant 16,000customers move to this payment Centrepay billpaymentshave alsocontinued to befacilitated purchase ofessential whitegoods. their No-Interest LoanSchemeavailable to thoseinneedfor the Shepherd Youth andFamily Service to increase theawareness of some oftheentrycriteria. We have alsobeenworking withGood changes inAugust 2009to thescheme’s guidelines,whichlifted payments for debttotalling around $500,000,asaresult of Scheme (HEEAS)to supportcustomers inneed,facilitating Department ofCommunities’ HomeEmergency Energy Assistance During theyear theteam were able to increasingly call onthe pay, ultimately bringingtheirdebtundercontrol. consumption andthen,while considering acustomer’s capacity to by helpingcustomers whoseekassistance to reduce theirenergy program, whichfocuses onpreventing furtherhardship, primarily Our KeepingCustomers Connected team operates ourhardship to better understand the different hardship customer categories. communications, around for example bill payment options, and also affordability-risk segmentation to help us better target our electricity retailers’ programs, as well as undertaking detailed in-depth look at the best practice elements of a number of other A review of our hardship program during the year included an hardship program. year around 2,250customers were benefitingfrom ourfinancial a jumpincustomers facing financialhardship. Bytheendof financial stress inthecommunity. During2009/10we againsaw board, includingelectricity, are withoutdoubtcontinuing to create The economic conditions, together withprice risesacross the K at a significantly reduced cost. allows new content to be published quickly disabilities. The custom built platform also caters to all visitors, including users with and up-to-date information – and it find accurate, simple-to-understand allowing our visitors to quickly and easily Our investment in the improved site is each month. with around 40,000 users now visiting us since the launch of a new site this year, Visits to our website are up over 30%, EE P I NG CUS TOM ERS

C ONN EC T E D own employment opportunitiesfor Indigenouspeople (p48-49). greenhouse emissions. We are alsoworking ondeveloping our organisations involved infarm forestry, revegetation andoffsetting up andrunning,we are assisting themto market theiractivitiesto as partofthecompany’s IndigenousEmployment Program, now training opportunities.Withthenative tree nursery, established success inyoung Indigenouspeople byoffering themon-the-job drive north-west ofBrisbane.Thefoundation aimsto cultivate Centre for Enterprise Development nearWondai, three hours’ Silver LiningFoundation established bytheNationalIndigenous During 2009/10,Ergon Energy alsocontinued itssupportofthe initiative (p41). powersavvy Strait andNorthernPeninsula Area communities through our which we have profiled onpages22-23,andseven oftheTorres leaders oftheWoorabinda Community incentral Queensland, We continued to buildonourrelationship withthe elders and conservation andelectricity safety messages. communities. Schoolvisitswere alsousedto spread theenergy financial hardship considerations specificto remote Indigenous agencies locally to explore service delivery concerns andidentify The objective wasto meetwithcustomers andgovernment across theCapecommunities from Mapoondown to HopeVale. Strategy, launchedin2008,regional visitswere conducted As partofthedeployment ofourA&TSICommunityEngagement well-being through ourservices andengagementwiththem. holistically to thesecommunities’ economic andsocial stand-alone power supply systems. Ouraimisto contribute power stations andlocal distribution networks, orthoughsmaller communities withpower, eitherthrough thegrid,viastand-alone supplies themajorityofregional Queensland’s Indigenous and Torres Strait Islander(A&TSI)communities. Ergon Energy During they WO both our business and the community as a whole. for community-driven projects that deliver positive outcomes for initiatives. Our strategy is to inject funds into regional Queensland more than $950,000 towards targeted social and environmental In 2009/10, our sponsorships and corporate donations saw us invest A DD R I K NG I NG W VA L ear, we continued to supportQueensland’s Aboriginal UE I TH O TH UR R O

I U ND GH P I G E R NO OJ US EC

T C S OMM PON U S N O I RS T IES H I P 21 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 Ri ev ew of Operations 22 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 REviEw Of OpERATiONs REFER TO PAGES 31ANd44-45. FOR MOREONOURCOMMUNITYENGAGEMENT practices, whichare thenconverted into donationdollars (p36). concept thatinvolves work teams accruing pointsfor safe work five years, $173,000in2009/10.ThePower Aidinitiative isasimple $1.6 milliondonated to hundreds ofcharitygroups over thepast Ergon Energy’s Power Aidprogram alsocontinued, seeingalmost essential for playingtheirsport. netball associations withthechance to apply for equipment and thenew Ergon Energy EquipmentGrant now providing local for talented regional Queenslandathletes to develop theirskills Ergon Energy NetballAcademy providing adevelopment pathway Our sponsorship ofNetballQueenslandcontinued –withthe Towns competition (p44). We alsocontinued oursponsorship oftheErgon Energy Tidy program andfor thepurchase ofessential medical equipment. to donate regularly to theRFDSfor theiraircraft replacement scheme thatoffers ourcustomers andemployees theopportunity years ago.Ourpartnership withtheRFDSisavoluntary donation customers are now donatingregularly, more thandouble only two Doctor Service (QldSection)through theirpower bills.Over 90,000 donated more than$4.3millionsince 2000to theRoyal Flying with theannouncement inJanuarythatourcustomers had The year alsosawanimpressive milestone incommunity spirit with anenergy conservation andenvironmental focus (p45). new $100,000Envirofund, launchedinMay2009,for projects groups bringtheirvisionto life withthehelpofErgon Energy’s The highlightthisyear waswatching over 19community-based into the sea by the Cairns Turtle Rehabilitation Centre. treatment and release of the critically endangered Hawksbill turtle back of household energy monitors to the public by Millmerran Landcare to the Our Envirofund has delivered some great outcomes – from the provision case sTuDY and inclusive way to way conductand inclusive business incommunities.” of trustandgoodwillshouldbeacknowledged asaneffective Ergon Energy assisting staff intheproject hascreated alevel and payment of bills.Theregular andwillingcontact by Woorabinda, particularly around better to manageelectricity ways “This project hasresulted in regular helpfor thepeople of from aletter to theOffice ofClean Energy: The value delivered to date isbest saidinUncle Bill’s words reduce electricity wastage. community beginto understand how they can identifyand Regular visitsto Woorabinda have alsobeenhelpingthe strategic goalsfor education inIndigenouscommunities. Workplace HealthandSafety to helpthemmeettheir shared withtheElectrical Safety Office andtheDivisionof program for thecommunity. Theprogram haseven been and successfully delivered anelectrical safety education Since thecultural training, Christine andAaron have developed This understanding hasbeenatthecore ofoursuccess.” traditional waysofencouraging appropriate behaviour. “We learned aboutfamily andcommunity structure andthe the people.” and we listened to thestories andthehistory oftheplace and watches, we went to avery specialplace wayoutinthebush “With nomobile phones(there isnoreception anyway)andno heart rather thanthehead.” experience Christine describedas“magic...learning withthe background andwhythingsare asthey are. Itwasan of thepeople whomake upthecommunity, thecommunity’s The cultural training wasaboutdeveloping anunderstanding to listen andlearn. the QueenslandAmbulance Service andalocal schoolteacher, They arrived atWoorabinda, along witharepresentative from Safety Aaron Smithorganised someswagsandoffthey went. and SupportOfficer) andSeniorAdvisorCommunityHealth time wastheAboriginalandTorres Strait IslanderEmployment National Contact Centre Team LeaderChrisLohse(whoatthe Ergon Energy’s Energy Education AdvisorChristine Robertson, representatives participated incultural immersion training. community, attheinvitation ofUncle Bill,three Ergon Energy In thefirst step towards Ergon Energy engagingwiththe sustainability inaction. concern for, hispeople thatmakes thisareal story about community radio station. Itisthisdeep-seated love of,and community west ofRockhampton, setupandrunsthelocal ‘Uncle’ BillThaiday,arespected elderintheWoorabinda We aLLWiN! BusH MaGic WiTH aLiTTLe we are also looking at facilitating the- community’s Ergon Energy is continuing to work− with the government Thecommunity ofwoorabinda isworking towards – sUsTAiNABiLiTY iNACTiON isolated networks, and electrical safety risks. to reduce bill payment issues, peak demand on rural and model to engage with the Indigenous communities we serve As a business our challenge is to build a more sustainable associated bills, and staying safe around electricity. sensitive advice on reducing their electricity use and Our Indigenous communities need tailored, culturally THe cHaLLeNGe

suitable and sustainable housing. involvement in the design and construction of culturally heating and cooling. better cultural fit and are more economical, for lighting, woorabinda, such as introducing technologies that have a to look at further partnership opportunities with of appliances, to havingreal ‘energy sense’. skills from budgetingto thecare andmaintenance by beingamore self-sufficientcommunity, withlife becoming arole modelfor indigenoustownships

community

with the the with Working Working christine robertson “ We are really getting back to andand otherother serviceservice providersproviders cancan help.help. WoorabindaWoorabinda elder,elder, hehe knowsknows whatwhat hishis peoplepeople needneed andand howhow ErgonErgon EnergyEnergy ourour ErgonErgon EnergyEnergy representativesrepresentatives foundfound outout veryvery quicklyquickly that,that, asas a a wellbeingwellbeing ofof hishis people.people. WhileWhile undergoingundergoing culturalcultural immersionimmersion training,training, ‘Uncle’ Bill Thaiday (closest to the front) is passionate about the to support their community.” Woorabinda people need from us listening, and finding out what the basics, sharing our expertise, to support their community.” Woorabinda people need from us listening, and finding out what the basics, sharing our expertise, EnergyEnergy EducationEducation AdvisorAdvisor 23 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 REviEw Of OpERATiONs 24 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 Ri ev ew of Operations ur customers’ growing lifestyle was still below itsJune2007winter peak. both exceeding their2006/07summerpeaks,althoughSouthern December, andNortherninFebruary, withSouthernandNorthern peaked atdifferent times,Central inlate November, Southernin was duringthesummerof2006/07.Eachthree regions 2,542MW, just underthehighest spike experienced to date, which grown onaverage by2.5%eachyear. In2009/10demandpeaked at Over thepast five years, maximum demandfor electricity has local industry, aswell aspopulationgrowth. such asplasmatelevisions, andinmanyareas electricity intensive the penetration ofairconditioning andotherlifestyle appliances, the summermonths,andfluctuates year-to-year. Itisdriven by Peak demandlasts for only shortintervals, ispredominately over E AIR 100%

HOUSEHOLDS WITH AIR CONDITIONING L 50% EC 0%

C T OND security of supply a major priority. electricity network – making considerable pressure on the population growth, have placed requirements, along with O RICI 0620 0820 2010 2009 2008 2007 2006 I T TY D for further insights into our network planning and operations highlights our achievements in this area – our Network Management Plan is available online to weather events, this year we’ve had a major focus on securing the network. This section To address the growth in electricity demand, and to make the network safer and more resilient SECURI I ON E I NG M A ND U PT C A ONT K E

IS I N D UES RIVI for electricity inthis area alone. tonetwork keep upwithdemand will needto beinvested inthe expected, abilliondollars over increases towards 90%,as if airconditioning penetration grow. thenext Over years, five the take-up iscontinuing to perhome–and units onaverage installed –withclose to three now airconditioning have 79%of Queenslandhomes Over TO G NG TH NG D R E OW M A ND E N E − − − − The othercapital works achievements for 2009/10include: a single element ofthesystem fails. ended. Itmeansthatsupply can bemaintained intheevent that was appliedpriorto thefive-year regulatory periodthathasjust up from 78%to 80%.N-1isahigherlevel ofsecuritythanwhat 57% in2008/09.Securityofsupply atourzonesubstations isalso now considered to have thehigher‘N-1level ofsecurity’,upfrom overall securityofsupply ofour bulksupply substations –70%are the network’s existing substations. During2009/10we againlifted In linewiththiswe are alsoimproving securityofsupply across period endingin2009/10. perspective, in the investment program for the five-year regulatory section ofnetwork considered critical, from asecurityofsupply experienced intheNorthMackayarea. Itwasthe last remaining keep pace withtheunprecedented load growth currently being in theorder of$100million.Thisinvestment hasbeenvital to under wayto reinforce supply to NorthMackay–aninvestment its commissioning wasamajormilestone intheprogram ofwork bulk supply substation atGlenella inMackay. Thefirst stage of The most noteworthy achievement wastheconstruction ofanew to improve securityofsupply. a range ofmajorupgrades andnew network projects undertaken During 2009/10,$674.9millionwasinject SECURI − − −

TWO installed transformer capacity Mackay project (above), willprovide anadditional260MVA of in central and northQueenslandwhich,along withthenorth Pocket, BelgianGardens andOonoonbazonesubstations, establishment of a new BSP at Louisa Creek, north Queensland. Supply Points (BSPs), including the redevelopment of Dalby and Mundubbera andBlackRiver zonesubstations Central Queenslandandtherefurbishment oftheGayndah, Bundaberg Central, Berserker andTanby zonesubstations in at zonesubstations, includingtheestablishment ofthe at Jundah, Burketown, Kubin and Pormpuraaw power stations. signific Gununa andMurray Island power stations r region to athree-phase system de 110kV powerline from Middle Ridgeto Warwick signific signific incr incr eplacement ofgenerating setsatDoomadgee, Mapoon, velopment oftheRosedale SWERschemeintheWideBay ease of220MVA ofinstalled transformer capacity atBulk ease of118MVA ofinstalled transformer capacity TY OF ant progress withtheestablishment ofthenew Jubilee ant progress withthereplacement ofgenerating sets ant progress withtheprovision ofahigh-reliability SU R PPLY K ASSURE . D ed into thenetwork with zone substation. now under way, is a new feeder from Glenella to the existing north Mackay shown here with the line being strung by helicopter. The final stage, this year, along with a major powerline from Pioneer Valley to Glenella, saw the construction of a new bulk supply substation at Glenella in Mackay The major program of work under way to reinforce supply to north Mackay connections were expanded –withrural subdivisionnow open During theyear the‘contestability’ optionsavailable for new 180-day-target. initiated works improved to anaverage 162days,well withinour levels ofriskrealisation. Connectiontimesfor new customer- material costs, supported bylower commodity prices, andlow customer connections, come inunder-budgetthrough favourable the program, which includesindividual,subdivisionandlarge program down 24%to $220.6million.Thisdrop indemandsaw customer-initiated capital works program withtheoverall The ec TH I been met. to safety-priorities andothermatters, allcritical milestones have of 85%,dueto weather impacts,diverting resources to respond and oncost withascore of79%.While thisdidnotmeetourtarget The majorityofourkey ‘alpha’projects were delivered ontime MILLION N $400 $800 VES E $0

EC TM onomic downturn hasimpacted dramatically onour ONOM 0620 0820 2010 2009 2008 2007 2006 E NT IC C ONT DOWNT I N UES UR TO N I MP S T RE A 2011 C NGTH T S investment to return. for record levels of forward we are planning risk realisation. Looking costs, and low levels of work, favourable material drop in customer-initiated budget due to a significant the network, it was below significant injection into $674.9 million was a While an investment of E N TH E N E TWO R K CUS supporting customer choice. market for electricity network designandconstruction, ultimately The aimofthesechangesisto continue to develop acompetitive associated withthedesignandconstruction. will besignificantly reduced, to reflect theremoval ofthecosts these arrangements Ergon Energy’s ongoingnetwork charges alternative service providers. For customers connecting under connection assets, orto arrange for themto beconstructed by pay Ergon Energy upfront to designandconstruct theirdedicated arrangements, alllarge customers now have achoice to either new large customer connections haschanged.To supportthenew for thedesignandconstruction ofdedicated connection assets for move to theAustralian Energy Regulator, theregulatory status arrangements relating to large customer connections. Withthe We have alsobeenpreparing for amajorchangeintheregulatory works provided theconstruction meetsminimumstandards. private companies to construct new electricity connection that rural subdivisiondevelopers can obtain quotations from to contestability (inlinewithurbansubdivisions).Thismeans commercial and residential customers through its two 32MW transformers. Business District. The substation has the capacity to supply about 10,000 has secured supply to south and east Bundaberg, as well as the Central The $28.6 million investment in the new Bundaberg Central substation MILLION $300 $150 $0 TOM 0620 0820 2010 2009 2008 2007 2006 ER - I NiT IA T E D WO R K S Dr op of 162days. connection timesto anaverage animprovementsupported in down to $220.6million.This line withtheeconomic slow connections, dropped 24%in initiated ornew capital works Demand for customer- 25 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 Ri ev ew of Operations 26 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 REviEw Of OpERATiONs case sTuDY Ultimately, anintelligent electricity network will − Theshared visionwillassist usinpreparing for − partnering withENERGExonsuchastrategic – sUsTAiNABiLiTY iNACTiON network performance. and utilised,aswell asoutlinethehigh-level objectives around will guidethewayinwhichassets andtechnologies are deployed for thenext 20years. Itisalong-term, shared strategic view that today’s decisionssupportourneedsandcustomers’ needs defines theanticipated network requirements. Itisaboutensuring describes theprincipalcharacteristics ofthefuture network and The documentarticulates thefuture environment we’ll operate in, development oftheQueenslandelectricity distribution network. joint Network Visionto 2030–along-term strategic view for the east Queenslanddistribution counterpart, we have produced a As partofagrowing collaboration withENERGEX,oursouth sMarT FuTure a visiONFOr a our customers. enhance theeconomic andlifestyle aspirations of for Queensland. and delivering aquality,secure andreliable network cost-efficiencies inthefuture. for even greater collaboration andpotential document astheNetwork visionlaysthefoundation

the future the to Looking supply reliability. expectations around operational efficiency and power the escalating demand for electricity and delivering on be adapting to a new operating paradigm, while managing high-tech world at an affordable price. Our challenge will – they will want choices and the benefits of tomorrow’s increasingly empowered to manage their electricity use The adoption of new technologies will see customers THe cHaLLeNGe same time producing better environmental outcomes. in turn enabling participation in emerging energy markets, and at the and accommodate the growing level of distributed energy generators, It will see us increasingly using time-based data to manage capacity issues for an increasingly technology-driven world at an affordable cost. with non-traditional solutions. It’s about providing the power supply needed work more closely with our customers to manage peak demand, frequently electricity use. This will change the nature of the network and require us to In the future, customers will be increasingly empowered to manage their Protection andCommunications Group Manager Jason Hall It’s anexciting future.” greater coordination between industry players – and the customer. efficiencies and improved reliability, while supporting connectivity and can rise to these challenges; one with the future smarts to deliver Our vision is all about moving towards an intelligent network that energy devices, storage andreduces incost. This willcome astechnology advances, particularly inthearea of use of distributed renewable changestheparadigm. generation to onewhere thetake upof new technologies andtheincreasing chainthat currently value industry flow seespower outwards, As anorganisation, we’re from anticipating ashift thecurrent We’re alsoaware of potential climate changeimpacts. to expectations have of anaffordable, highquality,electricity supply. energy managementknow tools, ourcustomers andwe willcontinue We solutions,suchas needto know embrace non-traditional we’ll We mustmeet know thegrowing we demandfor electricity. planning for it. “To us,sustainabilityisaboutunderstandingthefuture and Talking aboutthevision... north-east of Blackwater in central Queensland’s Bowen Basin. under budget. The Yarrabee open-cut coal mine is about 40 kilometres complex Yarrabee Mine 66kV Substation Connection Project on time and An innovative cross work group effort in central Queensland delivered the ranked network risks. and efficiently aspossible, bygivingapriorityto thehighest that we develop ourelectrical network infrastructure asprudently risk-based asset replacement programs. Itisallaboutensuring pieces ofwork –anexample isthemove to increasingly typeor and ishelpingto unlock theresources neededto undertake core programs. Thisapproach hasintroduced improved accountability develop acommon risk-basedapproach to optimisingourworks To achieve thiswe have also worked jointly withENERGEXto of performance risk. for thenext 20years, while best addressing ourimmediate areas that today’s decisionsenable usto meetthecommunity’s needs been central to ourplanningefforts thisyear. Theaimisto ensure Embedding ourvision,andtheroad map(p50)to getthere, has services (p26). what we have today, with new, innovative products, processes and build an increasingly intelligent network, one very different to Our network vision – developed jointly with ENERGEX – is to risK MaNaGeMeNT TO HeLPreaLiseTHevisiON JonTurner “ We’re helping our customers energy conservation generally.” as well as advising them about efficient electrical appliances, fluorescent lighting to energy- measures from compact implement demand management SWER Improvement Manager

Driving down down Driving

demand ‘ sWer’ PiLOT regional Queensland. reduce costs and maintain quality of supply throughout network. We need to continue to develop ways to both more expensive it is to build and maintain the electricity location, the lower the customer densities and the supply. Our challenge is that the more remote the and remote locations and they want a reliable electricity Many of our customers choose or need to live in rural THe cHaLLeNGe case sTuDY and implementation approach. can bereplicated more broadly withasimplifiedengagement with theaimofdemonstrating thatthesuccess ofthepilot north west ofClermont; andEromanga, west ofQuilpie– Georgetown; Dajarra, southofMtIsa;Mistake Creek North, additional SWERnetworks –intheGilbertRiver, west of The second phaseextended thetrialthisyear to four Kamilaroi Station andtheBurke andWillsRoadhouse. of properties involved –Gleeson Station, Boomarra Station, Integral to thepilot’s success isthecommitment oftheowners exceeding itsoriginalcapacity. demand beingplaced ontheSWERnetwork; ademandfar undertaken atfour properties inresponse to theincreasing The pilot sawarange ofdemandmanagementinitiatives between this‘pilot’ andfuture ‘business-as-usual’ projects. owners andErgon Energy. Ourfocus now isonbridgingthegap is yieldingsignificant savingsfor boththelocal rural property on oneofourmanySingle Wire EarthReturn (SWER)networks An innovative demandmanagementpilot inCloncurry North animproved animproved qualityof supply qualityof supply andbetter andbetter customer customer − − adeferral adeferral of$1.85millionininfrastructure of$1.85millionininfrastructure upgrades upgrades − − a20%reduction a20%reduction in peakdemandandestimated inpeak demandandestimated − − NorthswERachieved: NorthswERachieved: The demandmanagementtrialforThe demandmanagementtrialfor theCloncurry theCloncurry sUsTAiNABiLiTY iNACTiON a WiN-WiN! OuTcOMes relationships – all partofthewin-win. investment made by three ormore years, valued well above the 33 tonnes ofavoided greenhouse gasemissions energy savingsof37mwhperyear, equatingto 27 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 REviEw Of OpERATiONs 28 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 REviEw Of OpERATiONs decisions andlighting standards. bulbtypesthroughvarious thetrialwillinfluence future investment State andFederal Governments. Theinformation gainedby comparing of a$700,000program,in CairnsandMtIsaaspart the withourpartners To are we easedemandonthenetwork testing four typesof street lights network planningprocess. solutions andto better integrate demandmanagementinto our Our aimisto buildtheexpertise to develop anddeliver innovative programs, manywith QueenslandGovernment fundingsupport. To date we have piloted arange ofdemandmanagement and processes. non-network solutionsinto asset andnetwork planningforums Solutions group established withtheresponsibility to interface part oftheplanningprocesses –andanAlternative Energy It hasalsoseendemandmanagementincorporated asanexplicit for 2010-15. of theAustralian Energy Regulator’s Distribution Determination of $72.2millionfor demandmanagementinitiatives aspart a network solution,hasled to ussecuringanallowance to respond to demandprior to makingadecisionto proceed with This commitment to investing innon-network opportunities mitigating related price increases. will reduce theactualcapital expenditure required andassist in their peakinelectricity demand.Thisnon-traditional approach we are working withourcustomers to helpthembetter manage To address this,inparallel withourcapital works program, to meetthepower supply needsfor only 3%ofthetime. $500 millionhasbeeninvested into thenetwork over theyears So even ifyou look atthisconservatively, itmeansthataround or 257MW,occurred over less than300hours inthewhole year. For thesummerof2009/10,top 10%ofthepeakindemand, for only ahandfulofdaysperyear. for aninvestment thatisonly required, insomeareas, demand. However, thismeansthecommunity ultimately pays a level ofcapability andredundancy to service forecasted peak Traditionally we have plannedandbuiltourinfrastructure to TaKiNG aNaLTerNaTive PaTH TO THesOLuTiON Queensland customers. increase ourplanningcapabilities andbetter supportourregional increasingly consistent andstandardised format, to substantially It’s aboutbringingtogether multiple sources ofinformation, inan our works program andnetwork planning(p53). modelling andeconomic simulationcapability thatwillsupport major progress madetowards aremote observation, advanced We have alsoimproved ourmodellingandplanningcapacity with improvement effectively equivalent to 22%. Townsvilleoff –atrend that to peakdemand date anoverall hasachieved downwardabout thepositive trend inenergy useonMagnetic Island, Ian Cruickshank,talkingwithshareholding Minister, Stephen Robertson Project managerfor theTownsville: Cityproject, QueenslandSolar further development oftheseinitiatives into thefuture. The findingsfrom thesepilots willbeusedto inform the overall demandonthenetwork. Ergon Energy hastaken control. Allofthisleads to reducing the for limited control override bythepoolowners duringtimesthat solution thatprovides load control onpoolpumpswhile allowing load, withoutsacrificingthecomfort they provide, andatechnical Enabling Devices (DREDs)to reduce airconditioner compressor (p 44).Andwe are alsotriallingtheuseofDemandResponse rebate programs to getbetter outcomes for ourcustomers North Mackaythisyear piloting theuseofavailable Government We alsorolled outourEnergy Savers initiative across MtIsaand systems across thenetwork (p27). we are onthewayto replicating thissuccess infour otherSWER North SWERnow achieving a20%reduction inpeakdemand– Return (SWER)program –withthefirst phaseontheCloncurry on page43.Anothersuccess hasbeentheSingle Wire Earth Townsville: Cityproject QueenslandSolar showcased inmore detail – oneofourgreatest success stories to date hasbeenthe Our residential demandmanagementtrialsare alsocontinuing substation byatleast two years. of load reduction we can defer aproposed $20millionzone in thisarea to reduce peakdemand–if we can contract 6MVA a mutualbenefitinErgon Energy working closely withcustomers to theBohle Industrial Area, nearTownsville. Here againthere is now underway,we have alsostarted taking thelessons learned With theverification ofthecontracted outcomes inthisproject and alsochangesto lightingandimproved buildingdesign. largely bychangesto theirairconditioning arrangements, a partnership withJamesCookUniversity. Thisisbeingachieved 7MVA load by2015through reduction strategy to deliver This includesapeakload industrial customers. of large commercial and contracted witharange future demandreduction with inexcess of20MVA of bearing fruitinTownsville, These efforts are now demand management trial. participate inourpoolpump Volunteers were recruited to by 2012,whichwillunderpinthefuture connection ofa range of and 80substations linked byacore telecommunication backbone an investment of $134.4 millionwillseeapproximately 40depots telecommunications requirements more broadly. The first phase of greater control ofthenetwork –aswell assupportour Network’, or‘UbiNet’.Thisinitiative willpave the wayfor telecommunications network –known asthe‘Ubiquitous Construction beganthisyear onourallencompassing E until thereplacement program iscomplete. have animpact,althoughalesser one.Thissituationwillremain the assessment oftheriskandcondition oftheswitch continues to October 2009,thenecessary changeto work practices to enable replacement program for theswitches. While the ban waslifted in a solution,changingwork practices, aswell asaccelerating a working closely withoursuppliers andemployees to fast track exacerbating theimpact ofanoutage (p33).Ourresponse sawus network to carry outplannedmaintenance andfault restoration, The bansignificantly reduced theabilityto isolate sectionsofthe the safety imperative madetherestriction absolutely necessary. around athird ofthoseinservice across thenetwork, soagain was putinplace inApril2009.Theseswitches account for in-service failure ofseveral modelsofAirBreak Switches (ABS) The unrelated network operation restriction arisingfrom the live-line standards andprocedures isshowcased onpage37. incidents wastaken inFebruary 2009.Thereview ofour to address anincrease inlive-line related electrical safety step ofsuspendingalllive-line work onthehighvoltage network operation ofarange ofAirBreak Switches. Theunprecedented of ‘live’ linework practices andtheliftingofabanplaced onthe performance –most noteworthy beingtheprogressive resumption programs have alsobeeninitiated to address network In additionto oursummerpreparations, arange ofother C spares were alsoundertaken. (p 31),contingency planningandthestrategic placement of maintenance programs, most importantly vegetation clearing completed inpreparation for thesummerthreat. Targeted lines incyclone-prone communities withthree majorprojects ongoing investment inundergrounding key strategic overhead ensure securityofsupply over thesummer. There wasalsoan discussed, deliver 131MVA ofadditionalnetwork capacity to were delivered. Thissawthecapital investment program, already commitments madeinour2009/10SummerPreparedness Plan In thelead upto thisyear’s summerstorm periodthe increasing resilience of the network. and customer communication capability, and in many ways the demonstrated the professionalism of our emergency response region. Like the earlier events, this major natural disaster coast, bringing gale force winds to the Mackay and Whitsunday Then in late March Cyclone Ului crossed the central Queensland some ofthemost severe flooding inacentury. St George, aswell asotherareas oftheSouthWest, experienced by early March thecommunities ofCharleville, Roma,Bollon and breadth ofthestate asthemonsoonaltrough moved south.And systems, brought drenching rain andgusting windsacross the north, which,althoughthey were atnotimeextremely intense In Januarywe faced thethreat ofnotonebuttwo cyclones inthe major weather events across thestate. The 2009/10summerstorm seasonhaditschallenges with SU XP OMP MM A ND RE ER I H NG O P E RE N SIVE P UR ARE

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A N TY ECESSI TY the storm season. asbolster thenetwork’splanned outages,aswell resilience during key sites throughout willhelpto network, maintain supply during ofportfolio large andsmallmobile unitsnow generation located in The10MWofgeneration. additionalcontingency capacity, from the We alsomadeasignificant have investment instand-by mobile to build four more inthenext 12months. substation maintenance istakingplace, for example, and there are plans capacitywhich can to minimiseoutageswhile beusedinatemporary Ergontransformers. Energy skid-mounted hasfive transformers, maintenance isbeingboosted by theuseof stand-alone skid-mounted The potential to minimiseunplannedoutagesduringsubstation electronic consumer goodsandelectronic controls withinindustry. surges, isanissue thathasgrown ininfluence withthetake-up of quality, encompassing suchissues asvoltage dips,harmonicsand year with1,150constructed ready for roll outin2010/11.Power stage oftheNetwork Monitoring Project saw500installed this throughout thenetwork to monitor qualityofsupply –thesecond An investment isalsobeingmadeininstalling metering units its long-term network performance trends. or underperformance andtherefore for Ergon Energy to improve Under thenew framework, there are benefitsorpenaltiesfor over that seeksto ensure continuous improvement ofthenetwork. These efforts are allinlinewiththeregulatory incentive regime of faults and offering the remote capability to respond. helps us respond to power outages faster by immediately alertingthat us supplies 90% of our customers by 2015. The SCADA system substations by June 2011, and remotely controlling the infrastructure(Supervisory Control and Data Acquisition) technology to 56 zone monitoring and control capability. This will see the provisionreliability of SCADA we are also accelerating the upgrade of our networkTo narrow the gap between current performance and our targeted required to service intelligent network devices (p 16-17). foundation for our vision for the network, by enabling the connectivity state-of-the-art telecommunications system will also provide the sophisticated information technology to our electricity grid. This 29 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 Ri ev ew of Operations 30 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 REviEw Of OpERATiONs case sTuDY as captured here in Proserpine. in the region off line with extensive damage across the network, The destructive force of Cyclone Ului put 31 of the 33 zone substations to underground supply to essential services. benefited from themillionsofdollars invested inrecent years no doubtthatcommunities like Cannonvale andAirlieBeach Reliability Enhancement program –known asCARE. There is Our restoration efforts were madeeasier byourCyclone Area their contact centre. additional fieldcrews, mobile generation andsupportfrom ENERGEX alsoplayed arole, assisting theresponse with Management Groups and key community stakeholders. positive exchange of information with District and Local Disaster in the media and on our Storm Centre website. There was also a had the latest information. They were supported by regular updates Townsville and Rockhampton, worked tirelessly to ensure customers Our National Contact Centre’s ‘cyclone teams’, located in both targeted to rapidly restore supply to as many customers as possible. services. Repairs and the use of standby generation were then the network safe and then on prioritising the restoration of essential suffered damage to their own properties – first focused on making as the winds began to weaken; with crews – many of whom had These efforts were under way in earnest by mid-Sunday morning power restoration. Committees were activated inreadiness to coordinate the landfall, ourCentral andNorthernregions‘ Disaster Management management framework, dayspriorto theCategory 3system’s As acentral partofErgon Energy’s triedandtested disaster Mackay, northto Bowen andwest to Collinsville. as itcrossed thecoast onSunday21March, cuttingpower from Cyclone Uluibrought gale force windsof200kilometres anhour reaDiNess TesTs Our cYcLONe uLui our business-as-usual commitments. risks to both our people and the community, along with while simultaneously managing the heightened safety challenge is to meet expectations of supply restoration, first step to rebuilding the lives of those affected. Our far-reaching – restoring the electricity supply is a critical The impact on communities hit by natural disasters can be THe cHaLLeNGe fatigue management and dedicated safety Officers − To keep ourcustomers updated onrestoration − Aninvestment ofover $12.3million,andaround 350 − Bydayfour ofourCyclone Uluiresponse, power had – sUsTAiNABiLiTY iNACTiON of thenext inevitable natural disaster. approach to ensure we are even better prepared for theimpacts event, we have analysed ourresponse andevolved ourplanned to provide lessons, andCyclone Uluiwasnoexception. Since the It should,however, besaidthatthere isnothinglike thereal thing the importance ofbeingAlways safe. working inthefield,alongside ourcrews, reinforced 18,800 cyclone-related calls ontheoneday. calls (ontop oftheirnormalworkload) –peakingat progress, ourContact Centre managedover 46,000 and countless kilometres ofline repaired. field personnel, sawaround 100power poles replaced had beenfully restored. by dayeight,allofthe60,000-pluspremises impacted been restored to allbut6,000homesandbusinesses –

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There when when There MarkBiffanti “ I would like to thank the part of the job we do.” need makes it a rewarding rallying together in times of being part of a community this is challenging. However, responding to a major event like community for their support – work at every opportunity I get.” 18 May 2010. saying“... I think Ergon have done an excellent job and I praise their Regional Council, Cr. Col Meng, recognised our efforts on ABC Radio, the front of their business. And another was when the Mayor of Mackay Whitsunday, a nursery at Cannonvale, sported this encouraging sign at praise we received from the community – an example was when Plants The professionalism of our cyclone response effort was clear from the Area Operations ManagerBurdekin local engagement. current projects with acommunity impact are beingsupported by progress smoothly. Thefirst step, however, hasbeento ensure or acknowledgement ofaproject solution early, sothatitcan phase. Theaimisto gainadvanced community endorsement, in theplanningphaserather thanaproject’s implementation more robust community impactassessment andengagement works suchasnew substations orhigh-voltage lines.Itwilldeliver engagement modelisbeingembeddedinto thebusiness for major Following extensive industry research, arevised community engagement can helpaddress this. under construction infrastructure, andthatimprovements to our significant concerns inthisarea, around existing, proposed or We recognise and accept thatcommunity members can have we buildinfrastructure inlinewithcommunity expectations. with communities throughout regional Queenslandto ensure Ergon Energy iscommitted, asfar aspracticable, to engaging In linewithourover-arching stakeholder engagementframework, cOMMuNiTY suPPOrTisviTaL adoption ofworld-class vegetation managementpractices. and tonnage ofvegetation removed, aswell asto promote the to improve ourunderstanding ofgreenhouse emissions generated includes puttingmeasures inplace internally andwithcontractors carbon footprint ofourvegetation managementpractices. This vegetation managementreporting to better understand thetrue Attention isalsobeingdirected atimproving thequalityof management program onbiodiversity. and to measure thelong-term impactsofthevegetation technical studies to monitor vegetation managementtechniques in vegetation management,theproject hasalsocontinued its number ofBunningsoutlets. To develop better fieldpractices than 120nurseries, includingundertaking demonstrations ata Plant Smartmessage around trees nearpowerlines through more Australia Queensland.Thisyear they have beenspreading the be deployed through ourPlantSmartpartnership withGreening with safety andcost benefitsfor customers are alsocontinuing to Innovative strategies to balance soundenvironmental practices management planning.Theinitiative isprofiled onpagep53. from alow flying lightaircraft, asakey inputinto ourvegetation see ususingacombination ofdigital andradar imagery,captured identify areas where vegetation isposingarisk.Thissuccess will Exciting progress hasalsobeenmadearound usingtechnology to treatment identified in 2008 by the end of 2012. schedule to address the backlog of rural vegetation clearing and zone may be extended. This ‘fast track’ strategy remains on area around the line; though over subsequent cycles this clearance completed each month. We are now clearing only the immediate has nearly doubled the number of vegetation spans able to be significant productivity improvement. The new clearing profile and management rigour to outcomes, has helped to realise this as well as the revision of our vegetation management processes The introduction of two new standards for vegetation management, Maintenance Plan. contributed to anabove target delivery ofouroverall Network achieved withinthebudgeted investment of$78.5millionand previous year –andalmost halfofournetwork. Thisresult was 456,500 spansofpowerline –analmost 70%increase onthe the vegetation managementprogram inspected andcleared over To reduce theriskofvegetation-related outages, during2009/10 veGeTaTiON MaNaGeMeNT PLaNDeLivers 31 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 REviEw Of OpERATiONs 32 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 Ri ev ew of Operations is theevaluation ofthecompliance, relevance andeffectiveness of integrated managementsystem. Acrucialpartofthis framework included withinourdeveloping health,safety andenvironment Cultural heritage, asafacet ofISO14001accreditation, isbeing network’s geographic information system. ongoing procurement ofheritage related datasets, to enhance our our registered cultural heritage sites information, through the our assets, andincreased thesimplicityandaccessibility of and unregistered, cultural heritage sites to beassociated with continued to raise staff awareness ofthepotential for unknown prevalent inourinfrastructure area. During2009/10we planning withbothIndigenousandhistorical cultural sites Cultural heritage isanotherimportant area ofournetwork (EMPs), andcompliance withwash down protocols. through riskassessment, Environmental ManagementPlans of thenetwork andprevent thespread ofexisting infestations introduction ofdeclared plantsandpriorityweeds into new areas working onotherpeople’s land.Ourstrategy aimsto limitthe weed control, Ergon Energy takes itsdutyofcare seriously when the field.Althoughlandholders have theprimaryresponsibility for minimise anypotential environmental impactswhenoperating in We alsofocused onourweed managementstrategy to ensure we the findingsofVictorian Royal Commission into Bushfires. reviewing ourmaintenance policiesandprocesses, inthelightof better outcomes for thecommunity. Inthecoming year, we willbe communications between thetwo organisations, to helpusprovide Queensland Fire andRescueService, facilitating data sharingand bushfire hazard areas. We alsocontinued to collaborate withthe and vegetation managementworks programs for assets inhigh ability to prioritiseourpre-summer preventive maintenance As partofourBushfire MitigationStrategy, we improved our sensitive areas are beingidentifiedandsignageinstalled. Management Plansare beingimplemented andenvironmentally part oftheCorridorMappingProgram. Project Environmental that are located inprotected areas hasbeencompleted as kilometres ofapproximately 1,500kilometres ofour powerlines cause minimumenvironmental impact.Sofar approximately 850 Areas to ensure thatinfrastructure development programs Practice andDeedofAgreement for Electricity Works onProtected revised QueenslandElectricity Supply Industry (QESI)Codeof and Resource Managementundertheprovisions oftherecently Ergon Energy isworking withtheDepartmentofEnvironment management strategies. powerline corridors to broader bushfire mitigationandweed specific environmental managementplansfor ournationalpark conservation efforts, we have arange ofmeasures inplace, from In supportofthew P Cyclone Area Reliability Enhancement (CARE) program (p 42). regional Queensland cities and towns – as well as our ongoing Maryborough in addition to numerous smaller projects in other owned beautification projects in Townsville, Cairns, Nanango and underground or replace overhead powerlines as part of community- this saw $3 million invested to assist local communities to relocate, consultation around our Community Powerline Project works – At the local government level, we also continued to undertake to modelling community evolution and economic activity. improvement and for collaboration – from energy conservation Government Management Association to identify areas for service with the Local Government Association of Queensland andrelationships. the Local During the year, Ergon Energy continuedOne ofourkey engagementchannelsisourlocal government to work closely R OT EC T I NG O UR LO orks program, aspartofourbroader CA L E N VIR ON S REFER TO PAGES 39-45 FOR MOREENVIRONMENTAL PERFORMANCE Rec based on2005/06data. paper usagecompared to last year andoverall a21%reduction the business. Inadditionwe have seenaslightreduction inoffice scrap transformers. Thisprovided areturn ofover $2millionto aluminium, andsteel for recycling, andmore than530tonnes of we recovered over 800tonnes ofscrap metal, includingcopper, Queensland Government Waste Strategy 2010-2020.Thisyear, Strategy, whichwillnow bereviewed withtherelease ofthe We have alsodeveloped thefirst draft ofaWaste Management Green Star rating. for a Green Star Office asbuiltrating andistargeting a5Star compromising staff comfort orwellbeing. Theproject isregistered initiatives to capture natural lightingandcooling, without under waywillfeature someofthelatest energy efficient The construction ofthenew Mackayoffice anddepotbuilding a minimumWELS4Star appliances; taps andtoilets. facilities. Potable water usageisreduced through installation ofas work continuing to introduce rainwater into ourvehicle wash down with harvested water usedfor garden irrigation,andtoilets, with and refurbishments includetheinstallation ofrainwater tanks, efficiency measures across itsproperty assets. Allnew builds Ergon Energy continues to incorporate energy andwater furniture orinlandscaping. of asystem to reuse redundant poles asbuildingmaterials, Trials inourNorthernandSouthernregion are testing theviability landfill we are currently triallinganumberofalternatives. at licensed landfills.To minimisetheamountofpoles goingto nailing –we still have to replace anddisposeofdamagedpoles our asset inspectionprogram andtechniques, such as pole While we aimto maximisethelife ofourtimberpoles –through poles for thefuture. associations withotherQueenslandgrowers whocan supply with theAustralian Forest Growers to develop long-term generations. Ergon Energy hasalsocommenced apartnership biodiversity offsetssothattheforests willbeprotected for future species. Insomeinstances theseenvironmental works qualifyfor We alsoplantasignificant numberoftrees for endangered fauna including weeding, removal ofinvasive trees anderosion control. new properties willundergo environmental rehabilitation works now totals 1,330hectares. Where appropriate, theforests onour at Gundiah,southofMaryborough. TheGundiahForestry Hub properties are located nearbyto ourexisting sustainable forest acquired two additionalproperties for forest management.These As partofourSustainable Pole Supply Project, during2009/10we redeploying theitem internally orthrough external recycling. When we nolonger have aneedfor anitem, we recycle itbyeither over 1,600 new transformers were purchased in 2009/10. purchased to be as efficient as possible – over 5,760 new poles and transformers we try to reduce the size and amount of the materials For our core infrastructure requirements such as poles and or reconsidering theiruse. committed to thebest possible useofresources byfirst avoiding us asignificant consumer ofresources, Ergon Energy isfirmly B and training, incidentreporting andriskmanagement. our current cultural heritage processes, documentation ES ognising thatthescale ofourinfrastructure programs makes T P RAC T ICE

USE OF an d 69. RES O URCES planned outages. of oursixdistributionreporting categories, whichincludeunplanned and Despite this,compared tothere lastyear, animprovement was across five months of asfive thepreviousmonths of aswell this financialyear, year. asanother restriction. majoroperating well Thissuspensionimpacted six again impacted as by onthenetwork, linework the suspension of ‘live’ andthefrequency (SAIDI) ofThe duration interruptions power (SAIFI) were iNTerruPTiONs DuraTiON OFPOWer 19% andthefrequency by16%. 2005/06 theduration ofunplannedoutages hasbeenreduced by and theeffectiveness ofoursummerpreparedness efforts. Since improved. Thisisareflection ofthenetwork’s growing resilience Despite this,thenetwork’s underlying reliability performance has performance with major weather events across the state (p 29-30). summer storm season was also a challenging period for network particular makes and types of Air Break Switches (p 29). The line work (p 37); and the operating restrictions put in place against combined adverse impact of the safety-initiated suspension of ‘live’ This year’s network performance outcome is largely a result of the for five of our six distribution reporting categories. Electricity Industry Code, set by Queensland Competition Authority, unfavourable compared to the Minimum Service Standards in thehowever, the network’s actual performance for 2009/10 has been their electricity supply remains largely positive (p 20). DisappointinglyErgon Energy’s research shows that our customers’ perception of *Reporting based on the Minimum Service Standard (MSS) exclusion criteria outlined in the Electricity Industry Code. - LongRural Distribution - ShortRural Distribution - UrbanDistribution Frequency Index (SAIFI) - Long Rural Distribution - ShortRural Distribution - UrbanDistribution Duration Index (SAIDI) TOTAL SAIDI 2009/10 NeTWOrK reLiaBiLiTYPerFOrMaNce 300 600 0 0620 0820 2010 2009 2008 2007 2006 sCORECARD NETwORK pERfORmANCE

TOTAL SAIFI iNTerruPTiONs FreQueNcY OFPOWer 0 3 6 0620 0820 2010 2009 2008 2007 2006 ≤980 ≤430 ≤150 Mss ≤7.5 ≤4.0 ≤2.0 t t t t t s improved significantly (p37). planned outage performance has practices inNovember, line work progressive reinstatement of live- 35% compared to 2008.Since the this elevated plannedoutages by hadtonetwork interrupt supply; necessary onthehighvoltage work practices meant all live-line The safety priorityto suspend FOr THesecONDYear PLaNNeD iNTerruPTiONs saFeTY PriOriTYeLevaTes PrOFiLe OFTHeDisTriBuTiONFeeDerLiNes as possible to theseservice expectations. endeavours to achieve performance levels thatare asclose Service Standards very seriously andwillcontinue itsbest do so.Ergon Energy takes itsperformance against theMinimum Standards have become more onerous andthey willcontinue to At thesametime,over thisperiodourMinimumService PLANNED SAIDI 2009/10 180 result 90 0 .977 .066 9.57 4.96 2.26 6.60 3.71 1.82 6.40 3.49 1.85 7.73 4.93 2.33 7.19 4.58 2.25 4 0 5 4 593 1,331 219 448 957 172 457 1,030 179 1,108 609 217 999 544 222 0620 0820 2010 2009 2008 2007 2006 2008/09 result 2007/08 density per kilometre of line. vast distances with a very low customer non-urban electricity network, spanning are supplied by what is considered a supply urban areas, 68% of our customers distribution networks that predominantly Unlike most other Australian electricity result cyclone activity and severe flooding. as what was experienced this year with 2005/06, a year that had a similar profile and 16% respectively when compared to outage duration and frequency: 19% significant improvement in unplanned responsiveness has supported a network resilience and operational Over the longer term, improved LONG RURAL ISOLATED UNPLANNED SAIDI PerFOrMaNce POsiTive uNDerLYiNG NeTWOrK 200 400 0 0620 0820 2010 2009 2008 2007 2006 2006/07 result URBAN SHORT RURAL 2005/06 result 33 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 REviEw Of OpERATiONs 34 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 REviEw Of OpERATiONs effort into itspublicsafety awareness activitieseachyear. Ergon Energy invests over amilliondollars andconsiderable crashed into overhead powerlines. dusting pilot intheBurdekin district waskilled after hisplane Tragically, there wasafatality thisyear. InApril2010,acrop Despite thissuccess, there isnoroom for complacency. electrical hazards are most prevalent. been achieved through partneringdirectly withindustries inwhich 13% ontheprevious year. Thestrength ofthisresult haslargely related Dangerous Electrical Events are alsodown more than previous year’s positive record. Inlinewiththis,overall asset with 2009/10showing arewarding 30%improvement onthe number ofelectrical-safety related incidentsinthecommunity, continued to drive significant improvements inreducing the Ergon Energy’s CommunityElectrical Safety Awareness Plan success iNcOMMuNiTYsaFeTYaWareNess BeiNG ‘aLWaYs saFe’ reach our Always Safe objectives. network for our customers and for our people. We will continue to do whatever it takes to through to behavioural change and leadership. It has also seen us invest to create a safer Addressing this priority has encompassed all aspects of safety, from our operational approach Ergon Energy is continuing to target zero injuries within our workplace and wider community.

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live . employees increased to 5.3in2009/10from 3.2for 2008/09. and ourDangerous Electrical Event Frequency Rate (DEEFR)for for employees increased to 5.3in2009/10from 4.1for 2008/09 frequency rate. Our Lost TimeInjuryFrequency Rate (LTIFR) injuries (LTI) per1,000,000labourhours andispresented asa The AIFRmeasures medical treatment (MTI)andlost time (AIFR) increased to 14.1during 2009/10from 11.8in 2008/09. address theunderlying issues. OurAllInjuryFrequency Rate Ergon Energy andacomprehensive planisbeingoutworked to lagging indicator performance isasignificant concern to Ergon Energy’s underperforming workplace healthandsafety stringent targets. Ergon Energy’s employee safety performance hasnotachieved our amongst thebest oftheAustralian electricity distribution entities, lost timeinjuryfrequency rate performance continues to be Whil O Y MM C The damagecaused to thenetwork isalsocostly. network, despite the35%improvement inthenumberofoutages. supply interrupted through community impactsonErgon Energy’s our customers. In2009/10,almost 70,000customers hadtheir network can alsocause power outages andinconvenience to priority ofourawareness campaigns, incidentsinvolving our While protecting community wellbeing istheoverwhelming home, aswell asstorm andcyclone, andflood safety messages. domestic safety messages includingelectrical safety inthe to more than600,000households.Itincorporated important A revitalised ‘Always Safe Around theHome’guidewasdistributed across Queensland. support materials were distributed throughout communities – allupover 90,000individualitems of‘LookupandLive’ and industry publications, were alsousedto target ‘atrisk’industries Numerous marketing channels,includingdirect mailand putting upChristmas lighting. television advertisements alsotargeted safety athomewhile safety andpowerline awareness messages, thisyear’s suite of on thecommunity’s electrical safety awareness. Aswell asstorm We continued mass market communication campaigns to build as aresult ofcontact withanoverhead powerline. personal consequences oflosing his$360,000B-triple trailer 350 700 O UR 0 e community safety results are improving andourcontractor WO 0720 092010 2009 2008 2007 U N R I KPL T S ACE A F E T

SA Y I F N E C TY P I D E N ER T S FO

D followed by Agriculture (30%). followed by Earthmoving (33%) Transport (40% improvement), from the ‘at risk’ industries Road/ improvement this year has come related incidents. The greatest in the number of electrical-safety there has been a 45% reduction commenced in earnest in 2007/08, Safety Awareness Plan Since our Community Electrical R R O M P D A N R CE A M A T I CA L LY Health andSafety Managementsystems. Safety Office andthecertification to AS/NZS4801Occupational retaining boththemandatory certification from theElectrical systems andthishasagainbeenreflected in2009/10byus Ergon Energy isproud ofitsunderlying safety management Always Safe objectives. and friends.We willcontinue to dowhatever ittakes to reach our reminder oftheimpactinjuryhasonanemployee andtheirfamily serious incidentsandnearmisses have alsoacted asasobering which shouldhave beenprevented. Duringtheyear, anumberof each injuryisconsidered seriousandistreated asaninjury have reduced thedurations ofmanyinjuriesto only afew shifts, Although effective incidentandinjurymanagementpractices 0.929), delivering costs savingsofapproximately $1.3million. to 0.529(industry average –0.625)from 0.836(industry average – worker’s compensation premium per$100ofwageshasdropped compensation claimscontinued to decrease. Since 2005/06our safe return to work, thenumber,duration andcost ofworkers Reflecting theimproved focus onmanaginginjuriesandthe AVERA $7,000 $3,500 serious incidentsandimprove ouroverall performance. of lower level incidentsisexpected to reduce thenumberofmore incident reporting across thebusiness. Theprompt management has resulted inapleasing andmarked improvement inthelevel of Our strong focus onmanagingincidentsandalltypesofinjuries ce PL WO

AIFR 12 0 6 $0 R K TARGET 2009/10 G E A

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C will remain a strategic priority. planning period safety leadership during 2009/10. Over the coming continuing to trend upwards All Injuries Frequency Rate management concern, with our Safety remains a major accepted in 2009. permanent impairment offers accepted and the addition of two to reflect ongoing costs for claims *2009 figure has been adjusted compared to $2,745 in 2010. claims in 2007 was $6,606 average cost of WorkCover continued to decrease. The workers compensation claims correspondingly the cost of our employees’ lives and have continued to benefit Our return to work efforts O C N L C A ER I M N S

D R O P S 35 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 Ri ev ew of Operations 36 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 REviEw Of OpERATiONs of eachother. They were: what isexpected ofeachandevery employee bythebusiness and representative group ofemployees to demonstrate andarticulate (p 4)and‘Values AlignedBehaviours’ were developed bya During 2009/10,safety wasembedded asoneofourcore values everything we do. sustainable safety culture –aculture where safety isinherent in We believe itisamatter ofcontinuously working onbuildinga When itcomes to safety there isnosingle intervention. THe NeXTevOLuTiON OFBeHaviOuraL saFeTY environment, safety and asset related incident management. framework to ensure a coordinated and consistent approach to with the implementation of a single incident management applied to all classes of incidents. This has been done in conjunction investigation methodology across the business and is now being This provides a more consistent safety, environment and asset Incident Cause Analysis Method (ICAM) for incident investigation. Another improvement initiative has been the implementation of the and allow better, more refined targeting ofinterventions. to better understand the causal factors of poor safety performance and oursafety riskanalysis capability. Thiswillultimately allow us Progress isbeingmadeonimproving safety incidentdata capture TaKiNG arisKMaNaGeMeNT aPPrOacH professional standards. the business to helpthemembedsafe work practices and in improving thecommunication skillsofmanagers across management framework. Aninvestment willalsobemade all levels ofmanagement,aswell asrolling outaconsequence accountability attheWork Group Leaderlevel (p51)andacross leadership capability; bymore deeply embeddingsafety asakey Efforts inthefuture willbefocused onbuildingoursafety meets themost stringent standards (p37). capability to undertake live-line work onhighvoltage assets now improvements have now beenimplemented andourworkforce of employee safety. Itispleasing thatnew, industry leading had a serious impact on the business, but was taken in the interest work andlive-line safety ingeneral wascompleted. Thisdecision suspended live-line work untilafullreview ofsafe systems of Following aserious‘live’ lineincidentinearly 2009,Ergon Energy primary focus of interventions to improve our safety performance. plan – the initiatives, which are highlighted here, have been the This coupled with the support of a Board endorsed five-point safety safety management system basics more effectively and efficiently. improving our ‘operational rhythm’, that is doing all the health and reviewed our approach this year, and have increased our focus on To address our workplace health and safety performance we GeTTiNG BacK TO Basics In linewiththis,asignificantIn linewiththis,asignificant initiativesinitiatives are are occurring occurring to to ensure ensure number ofcontinuousnumber ofcontinuous improvement improvement and environmentand environment information information ErgonErgon Energy’s Energy’s health,safety health,safety management system, eSafe, enables more effectively through managing the business to conduct itsactivities investigation processes. OurHealth audits, rehabilitation, incidentsand to refresh ourcommitment to and Safety policywasalsoupdated and safety performance. measuring ouroccupational health employees included: The otherproactive healthinitiatives offered to our and others to stay safe –72%ofemployees have now taken part. help people understand how they thinkandempower themselves ZIP isapsychologically-based program thatprovides thetools to improved to better integrate itwithourstandard work practices. In linewiththis,theZero IncidentProcess (ZIP)training wasalso educating healthylifestyle choices. injuries andillnesses athomeandwork byencouraging and package (p38).Theaimisto equipouremployees to prevent was expanded to includeaholistic Fitness for Work education At thesametime,ourhealthandwellbeing program, Power Up, incidents (p22). undertaking safety improvement initiatives andreporting safety through goodsafety performance, identifyingsafety hazards, launched in2004,allows staff to earnfundsfor local charities and recognition program, Power Aid.Theprogram, whichwas we alsocontinued thecore ofourhealthandsafety reward To promote andrecognise thesafe behaviours ofouremployees, reliable –Ialways adhere to thesafe system ofwork and courageous –Iamaware ofrisksto mysafety andIwill committed –Ihave zero tolerance ofunsafe behaviours donation. Photo provided courtesy the Balonne Beacon. Dean Champion presents local Angel Flight Pilot Scott Jones with a $500 choice. Ergon Energy St George workplace health and safety representative dollars – $1 for every point they earned – to Angel Flight as their charity of behaviour of a St George crew allow them to pass on Power Aid donation Our Power Aid safety reward and recognition program saw the safe has continued to beavailable. Posture atWork –manualhandlingandposture training work orpersonal challenges. counselling to employees andfamily members to address employee assistance Program –provided confidential voluntary vaccinations. season 1,545fieldandoffice employees accessed the ability to maintain services to customers through theflu Flu vaccinations –to protect ourpeople andsupportour myself andothers safe. constantly scan myenvironment andmanagerisksto keep speak upandact,to keep everyone safe. and Iholdmyselfpersonally responsible to besafe. case sTuDY Theproject waslargely completed byDecember 2009, − Every oneofour250highvoltage live-line workers, − Ourlive-line manualandprocedures have been – sUsTAiNABiLiTY iNACTiON reduce supply disruptions and keep our people safe. that we can call on to undertake live work on the network to both standards, we are continuing to expand the breadth of the practices in response to the introduction of the new national live-work While our live-line capacity has now largely been reinstated, capability; both theoretical and practical. one that required significant resources and a major training reinstate our live-line capability. It was a huge undertaking, operational review to the roll out of the training program to The project was undertaken over 10 months – from the rigorous practices in the field. the live-line ‘safe system of work’ from its foundations to support training arrangements and the tools used. The aim was to rebuild for managing the organisation’s live-line capability, our manuals, standardsstandards andand procedures,procedures, asas wellwell asas thethe governancegovernance arrangementsarrangements Since then we have reviewed the full range of our live-line people and the community. but it was seen as absolutely critical to ensuring the safety of our impact on electricity reliability, this was not a decision made lightly, all ‘live’ line work on high voltage assets. Due to the anticipated the field, Ergon Energy took the unprecedented step of suspending In February 2009, after an increase in electrical safety incidents in LiNe saFe aLWaYs ‘Live’ without interrupting supply. proportion ofthenecessary highvoltage work ‘live’ allowing usto once againundertake asignificant through therefresher training course. along withourcontractors, have beenre-authorised new Australian standard onhighvoltage live work. completely revised to meettherequirements ofthe non-negotiable. electricity infrastructure has to be behaviours when working around business – practicing ‘always safe’ of utmost concern to us as a injured on the job. This is certainly focus, our employees are still being dangers, and major management Despite an awareness of the THe cHaLLeNGe non-negotiable. electricity infrastructure has to be behaviours when working around business – practicing ‘always safe’ of utmost concern to us as a It’s about keeping our guys in We’re aiming to have the safest, “ We now have a sound platform to planned outage performance has largely returned to normaltechniques. levels. Since the progressive reinstatement of ourout live-line all the necessarycapability, work on the network normally completedFrom using February live-line to November 2009, planned outages were increased to carry saFeTY PriOriTY iNcreases PLaNNeD iNTerruPTiONs 10,000,000 20,000,000 PLANNED the field safe... and the power on!” Why would we aim for anything less? possible... the best in Australia. most effective live work systems develop our future capability. Manager Technical Solutions chris Darling

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AUG Being SEP OCT NOV 2008/09 DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV 2009/10 DEC JAN FEB MAR APR MAY JUN 37 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 REviEw Of OpERATiONs 38 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 REviEw Of OpERATiONs Johncass “ It is essential that we performance through a single, coordinated approach. for Ergon Energy to consolidate and improve upon its overall safety into the next five-year planning period. The plan lays the foundation developed a comprehensive Safety Management Plan to take us gets hurt’ and to be recognised as ‘A Leader in Safety’. We have Ergon Energy is committed to being a workplace where ‘no one LOOKiNG FOrWarD really resonates.” this is a commitment that you and your loved ones about what’s important to When you stop and think in the wider community. electricity perspective, workplace and, from an target zero injuries in the General ManagerHealthandSafety

Always safe Always FOr WOrK BeiNG FiT case sTuDY fitness for work. our people are willing and able to self-manage their to reduce our safety risks, and to build a culture where across Australia. As a business we need new strategies This is a challenge in workplaces, and on the roads, concerns, especially where drugs or alcohol are involved. Our employees’ fitness for work is one of our key safety THe cHaLLeNGe on-suspicion drugandalcohol testing. supported bytheroll-out ofbothrandom, post-incident and The behavioural changestargeted inthisarea are alsobeing their own, orothers’, safety orhealth. their dutieseffectively andinamannerthatdoesnotthreaten self-manage theirfitness for work, for them to perform It’s allaboutequippingouremployees sothey can a behavioural andphysiological perspective. employees withaninsightinto theimpactsofimpairmentfrom as well ascaffeine, nicotine andfatigue. Theaimwasto provide and includetheheadlinetopics ofillegal drugsandalcohol, employees, focus onthecauses ofworkplace impairment These drugandalcohol education sessions, offered to all roll-out ofahealthandwellbeing program. of anew DrugandAlcohol Policy andthe One ofthekey initiatives wasthelaunch emotional state –being‘fitfor work’. being inahealthyphysical, mental and this year ontheimportance ofourpeople Ergon Energy hasplaced amajorfocus 7,380 alcohol self-test kits and2,060drugself-test − Thefitness-for-work andAlcohol andDrugs − Employees are now clearer abouttheir − sUsTAiNABiLiTY iNACTiON metabolises different substances. help thembetter understand how theirown body kits were provided to staff across thebusiness to raised theawareness ofhealthylifestyle choices. psychologists to 90%ofemployees, have also education sessions, delivered byprofessional and safety intheworkplace. drugs orotherimpairmentsdonotaffect health responsibilities towards ensuringthatalcohol, C L that has been a major consideration in our network vision. models expected to be released on the market in 2011. This challenge is one becoming increasingly interested in purchasing electric vehicles with the first to evaluate the effect of their recharging on our network. Consumers are Ergon Energy, as a foundation customer, has purchased two electric vehicles − − Due t I C cyclones, are likely to affect Queenslandincoming years. average rainfall inmanyareas andmore severe storms and change effects, includinghigheraverage temperatures, lower of climate change.However, itisgenerally accepted thatclimate change responses asbymanagingtherisksposedscience Our actionsare guidedasmuchbyourstakeholders’ climate the challenges climate changepresents. and adoptingmore sustainable energy solutionsto address reducing emissions, proactively adaptingourorganisation, Ergon Energy. We are focused onenhancingoperational efficiency, Climat W faces of an industry responsible for around one third of Australia’s greenhouseand an opportunity gas emissions. to strengthen our business. We recognise our responsibilityDeveloping as one of theErgon public Energy into a leader in climate change response fulfils both a social responsibility − Change ResponsePlan2010-2015isbuiltaround: to employee engagement.Ergon Energy’s internal Climate business, from ourstrategic planningandoperations, we have embeddedclimate changeresponses across the NTO O

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M EA ARE than would have resulted from usoperating alone. especially ourcustomers, to deliver greater mutualbenefit l other partsofourbusiness customers’ responses to climate change,as well asadapting adapting ournetw electricity use operations andthoseassociated withourcustomers’ mitigating gr L everaging climate changeresponses ofourstakeholders, A o thecurrent andpredicted impactsofclimate change, T e changepresents risksaswell asopportunitiesfor UR E I

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highest priorities. help ensure emissions reduction initiatives are focused onthe The database reports are providing us withdeeperinsightsto 2007, aswell asto supportotherinternal andexternal reporting. requirements oftheNational Greenhouse andEnergy Act Reporting partly to ensure Ergon Energy complied withthelegislative greenhouse gasemissions data collection systems anddatabase, A key step forward in2009/10wastheenhancement ofour combined (p40). our vehicle fleet, airtravel andelectricity useemissions types year we have metthetarget we established for areduction in related emissions, aswell asreduce ourown emissions. This to helpcustomers andotherstakeholders reduce theirelectricity- our customers’ electricity use.We therefore have aresponsibility indirect, are equal to around 6.5% of the emissions associated with Er W tCO -e G ci RE

2 E gon Energy’s greenhouse gasemissions, bothdirect and PON 4,000 2,000 D

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E M I NHO SSI 24% from 2007/08. of schedule – emissions are down reduction in this area well ahead we’ve met our target for emissions communicate within the business, facilities and rethinking how we By enhancing video-conference O USE N S G AS

E M ISSI ON S 39 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 Ri ev ew of Operations 40 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 REviEw Of OpERATiONs 2010 (basedona 2006/07baseline),through purchasing ahigher our passenger and lightcommercial vehicles by31December were ontarget to achieve a15%reduction inemissions from QFleet ClimateSmart Policy byadoptingthesametargets. We vehicle fleet –We have supported theQueensland Government’s cOMMuNiTies BY 2050 THe PLaN FOr DieseL-Free GeNeraTiON iN Our isOLaTeD 2. Network losses, and accordingly emissions associated with them, have not been calculated at the time of writing. 1. Scope 1, 2 and 3 emissions are as defined in the Greenhouse Gas Protocol, developed by the World Resources Institute and the World Business Council for tonnes ofemissions peryear. provide upto 720MWhofrenewable energy, savingupto 500 generator atBirdsville, whichisbeingupgraded to enable itto and five solarconcentrator dishesatWindorah and a geothermal sources –we currently have two windturbines onThursday Island, We have astrategy to replace dieselgenerators withrenewable in dieselprices isariskfactor thebusiness isactively mitigating. more thanhalfthecost ofisolated generation andthefluctuation Scope 1,greenhouse gasemissions. Dieselfuel accounts for generators are responsible for themajorityofourdirect, or Queensland andislandsisolated from themaingrid.These plants intheTorres Strait, CapeYork Peninsula, western isolated generation –We operate 33diesel-fired generation emissions while meetinggrowing electricity demands. Despite somesuccesses, ourmost significant 2009/10greenhouse gasemissions, tabled below, reflect thedifficultyinreducing We are continually enhancingErgon Energy’s emissions data managementto track performance andinform business decisions. including the use of biofuels. energy conservation and an investment in renewable energy generation, isolated communities by 2050. We will do this through a combination of Ergon Energy has a target of replacing all non-renewable diesel use in our - Network losses scope 2–indirect emissions - Vehicle fleet - other - Vehicle fleet -passenger andlightcommercial - Airtravel scope 3–indirect emissions scope 1 - Isolated generation - Electricity use-occupied buildings UNITS OF ENERGY eMissiONs (tcO Sustainable Development. 125 250 0 1 0022 0024 2050 2040 2030 2020 2010 –Direct emissions sCORECARD OUR EmissiONs 2 -e) by Energy Conservation by Demand Reduced Diesel-fired Generation Diesel-fired Non-renewable Generation Renewable Energy 001 agt20/020/920/82006/07 2007/08 2008/09 2009/10 2010/11 Target 9,450.3 20,792 2,618 with employee air travel. July 2008, Ergon Energy hasoffset100%ofemissions associated ahead ofourtrajectory towards a20%reduction by2010/11.Since from employee airtravel by24%since 2007/08,placinguswell is acritical element ofourbusiness. We have reduced emissions air travel –Asageographically dispersed organisation, air travel electricity-related emissions by 5% by 2012 and 20% by 2014. 2009/10 baseline, Ergon Energy has established targets of reducing in the number of computers and electrical devices. From the use has risen by around 1%, partly attributable to an increase conditioning systems, lighting and other efficiencies, our electricity value of conserving electricity. In 2009/10, despite upgrades of air a combination of technical changes and a greater awareness of the In 2008/09 we registered a significant decline in electricity use due to 83 depots to support maintaining a safe and reliable power supply. electricity use –We occupy more than 108 buildings, including in 2008/09,5.45%oftheenergy entering ournetwork waslost. was notavailable atthetimeoffinalisingthisreport, however, emissions inventory in2008/09.Network loss data for 2009/10 attributed to theselosses andcomprise around 85%ofour and transformers andunmetered installations. Emissions are the form ofheatfrom powerlines, butalsofrom substations electricity supply process thatsomeenergy islost, largely in Network losses –Itisanunavoidable consequence ofthe emissions, and100%from 1July 2019. we willoffset50%ofallpassenger andlightcommercial vehicles taking more than240cars offtheroad for ayear. From July 2010, Purchases for thatperiodtotalled 1,037tonnes, equivalent to not compliant withtheminimumGreen Vehicle Guiderating. Ergon Energy purchased offsetsfor 2009emissions for allvehicles operational requirements, achieving thattarget isnow unlikely. ethanol blend), andreducing vehicle numbers. However, dueto vehicles, purchasing ahigherproportion ofE10petrol (10% proportion offour-cylinder, diesel and/ormore fuel-efficient t s t s s 1429891,4 11,118 10,640 9,829 11,442 6717,9 09682,192 80,996 76,295 76,711 1352,7 31219,398 23,192 21,275 21,325 ,0 ,0 ,8 7,143 8,281 9,703 7,906 ,6 ,2 ,5 3,423 3,256 3,028 2,464 na 2 9,2 4,8 886,950 840,883 794,829 case sTuDY Be powersavvy WiTH POWer... Be sMarT Almost halfofthe targeted commercial operators − Over 300homeenergy consultations have taken place, − Theaimofreducing electricity useby20%across – sUsTAiNABiLiTY iNACTiON consumption and save our customers money. that can be used in other isolated communities to reduce power to make the necessary changes, and ultimately creating a model energy (and diesel) conservation by working with our customers The next step is to convert these identified savings into practical commercial sense. the investments required to achieve these savings to make sound identified potential electricity savings of greater than 20%, and what they learnt. In the commercial sector, audits have consistently reporting significant reductions in their power bills after acting on Home consultations began in February, and customers are powersavvy to buy home appliances with higher energy star ratings are other Encouraging energy efficient design in new buildings and incentives in all seven local schools. deliver a highly effective energy conservation education program powersavvy government buildings. audits are being undertaken on commercial premises and consultations to over 1,000 households and more formal Locally engaged field officers are providing home energy businesses and government departments to achieve its target. a direct community engagement approach with residents, consumption at the local power stations. The project is using Area communities by 20%, with a consequent saving in diesel consumption in seven Torres Strait and Northern Peninsula The isolated communities energy saving pilot aims to cut power and therefore their power bills, is starting to show results. in off-grid communities cut their power consumption, powersavvy being around two years. payback ontheenergy savingproposals identified are already participating,withanestimated average energy savingresults. and althoughit’s early daysthere have beenpromising greenhouse gasemissions by5,000tonnes peryear. burn dieselto generate electricity, andinturnreduce the targeted communities willreduce theneedto initiatives. has also partnered with Education Queensland to , a Queensland-first project to help customers so it’s a win-win. customers are also keen to reduce their power bills, and by investing in energy conservation solutions. And our by both building customer awareness around electricity use in the generation of electricity for our remote communities, we have set ourselves the challenge to reduce diesel use Queenslanders’ carbon footprint by one third by 2020, In line with the State Government’s target to cut THe cHaLLeNGe the message and changing the way the community thinks abouthome energyits power advice. use. They are out in the community on aphoto) daily – basisall well-respected spreading local residents, who have Paulbeen trainedMills, Leonito deliver Lippitt, Flora Majid, Patsy Mills and Ergon Wendy Energy Phineasa has (not recruited in five Indigenous powersavvy field officers – much shehassaved onhernext bill. her consultation andsheisnow looking forward to seeinghow Matilda saved around $50inthefirst monthly account since which teaches thechildren how to reduce electricity usage. Richard has also taken up the follow theactionplan, whichisproudly displayed. other grandchildren visit,Richard ensures thathiscousins all taking “suchpride”intheirenergy saving.Whenever Matilda’s One ofMatilda’s grandsons, Richard, lives withherandisnow and airconditioning more efficiently. fluorescents andshefound outhow to useherrefrigerator electricity usage.Lightbulbswere changedto compact An actionplanwasdrawn upto helphercutbackon but found “itwasareal eye opener.” home consultation notreally knowing whatto expect, A resident ofHornIsland,Matildarequested apowersavvy about beingsmartwithpower. isvisitinghomeslikepowersavvy MatildaMcKeown’s to talk programpowersavvy at his school, 41 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 REviEw Of OpERATiONs 42 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 Ri ev ew of Operations change have presented opportunities for Ergon Energy to make State andFederal Governments’ desires to respond to climate climate changehasnotwavered. 2013, ourcommitment to respond to thechallenges of decision to delaytheintroduction ofaschemeuntilatleast Emissions Trading Scheme.Despite theFederal Government’s our business would have occurred withtheintroduction ofan One ofthemore significant impactsofclimate changeacross Business functionsare adapting recharging requirements. the impactsonournetwork that EVs could create through their is aimingto beonthefront foot whenitcomes to understanding price shocksandhighlightsmarket developments. Ergon Energy EVs isgrowing asthemediaprovides more speculationofpetrol market isonearea thatwe are looking at.Community interest in The entryofcompact electric vehicles (EVs) into theAustralian we are still implementing key projects identifiedinthebid. Government fundingto develop asmartgridwasn’t successful, and safely. While Ergon Energy’s bidinearly 2010for Federal technical solutionsto deliver low-emission electricity efficiently As thesmartgridnamesuggests, itencompasses arange of communications technologies are theessence ofa‘smart grid’. customers. Thisbi-directional flow andtheintegration of generator to customer –to atwo-way flow ofelectricity between electricity supply process moving from aone-waysupply –from Adapting thedistribution network ispivotal to supportingthe environmental impacts. and energy conservation, andreducing emissions andlocal encouraging andfacilitating cleaner electricity production concepts are threaded throughout thestrategy andfocus on Vision (p26).Climate changeresponse andenvironmental technology applications recommended to achieve theNetwork Technology Strategy thatprovides thestrategic direction onthe Ergon Energy haspartnered withE around 62%ofunplannedoutages onournetwork in2009/10. Minimum Service Standards, withlightningandstorms causing are accustomed to. We are notcomplacent inouraimto meet network faces above andbeyond theannualweather events we issues andthatthere are nosignificant andimmediate risksour climate changepresents. We are confident we understand the effective waysto continue to adaptournetwork to thechallenges In 2009/10,we have undertaken significant research into themost overhead network more robust. plants andemergency centres –andtaking actionto make our underground –to hospitals, water treatment plants,sewerage areas from Mackaynorthinvolves placingelectricity supply Area ReliabilityEnhancement program. Theprogram, incoastal of storms andcyclones over thelast decade through theCyclone We have beenadaptingournetwork to better absorbtheimpact Our network isevolving towards asmartgrid creating higherpeakdemandsfor electricity. encourage increased airconditioner penetration anduse, will increase inmanyareas, andmore strings ofhotdayswill more intensive andcause more flooding, drought conditions in intensity andmove furthersouth,rain events willbecome In Queensland,itispredicted cyclones are likely to increase customers, we must adaptto changingconditions. mitigating itsgreenhouse gasemissions andthoseofits In r A D A eality, regardless ofhow successful Ergon Energy isin PT A T I ON IS

VI T A L FO R O UR B USI nergex N ESS to develop aNetwork monitor the performance of the technology and its impactIsland on the by grid. Ergon Energy workers Sam Walters and Mick Eyles.it directly The trial into will the grid. Here the skins are being fittedtrial. toThis a poleinnovative on Magnetic technology is generating renewableA greatenergy example and exporting of asset adaptation in action is the solar photovoltaic skins more thanwe could alone. resources aseffectively aspossible. Together, we will achieve stakeholders byleveraging climate changeactionsandusingour we can deliver maximumvalue to bothErgon Energy andthese are makingtheirown responses to climate change.We believe suppliers, otherstakeholders, andeven ourown employees, Er L a business, highlightingadaptation prioritiesandopportunities. deeply understand thepotential implications onErgon Energy as Climate ChangeManagementPlan–hasalsohelpedusmore Energy Electricity Sector, andtheDraft South-East Queensland Improvements, inquiryinto Growing Queensland’s Renewable Queensland Government’s inquiryinto Energy Efficiency Making thesesubmissions –includingthosemadeto the submissions andprovide ourexpertise for policyconsideration. of around 430permonth,thetotal numberincreasing byover owned solarphotovoltaic energy systems to ournetwork atarate to climate change.In2009/10,we connected 5,200customer- electricity hasbeenakey driver, aswell asthedesire to respond their electricity supply thanever before. Theincreasing cost of C and paying more than $1.6 million for energy exported to the grid to date. with Ergon Energy connecting more than 7,000 systems to our network strong demand for solar photovoltaic systems in regional Queensland, The inception of the Solar Bonus Scheme in July 2008 has stimulated rs OM CUS 7,000 3,500 EVERA ustomers –Ingeneral ourcustomers are more engagedin gon Energy, ourcustomers, communities, governments, T 0 E 8DC0 A 9JN0 E 9DC0 A 0JUN10 MAR10 DEC09 SEP09 JUN 09 MAR09 DEC08 SEP 08 G E I NG

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E N E R G Y sHiNiNG success sOLar ciTY a case sTuDY that could be replicated elsewhere. same time demonstrate demand management solutions also play their role in tackling climate change – and at the island. It’s provided the community a great opportunity to this and to defer investment in a third power cable to the We needed to engage the community to better manage on Magnetic Island, off Townsville, has been rising steadily. Due to population and tourism growth, electricity demand THe cHaLLeNGe same time demonstrate demand management solutions also play their role in tackling climate change – and at the island. It’s provided the community a great opportunity to this and to defer investment in a third power cable to the on Magnetic Island, off Townsville, has been rising steadily. Due to population and tourism growth, electricity demand advanced electronic meters and ultimately new tariff options. comfort. The project is also providing energy assessments, conditioning demand without impacting on a household’s cooling compressor load or cycles. The devices help manage air Response Enabling Devices (DREDs) to reduce air conditioner One of the technologies we are now trialling is Demand maintain securityofsupply ontheisland. generation, thiswillhelpthenetwork to meetdemandand is alsobeingconstructed. Along withtraditional standby now installed oncustomers’ rooftops, a100kWsolarpark In additionto the395kWofsolarphotovoltaic energy systems case solar–andarange ofdemandmanagementstrategies. for theconcentrated deployment ofdistributed energy –inthis The aimoftheproject isto develop areplicable business model electricity useandgenerating renewable energy. grid-supplied electricity consumption trend –bothbyreducing and business operators onMagneticIslandto defytherising initiative led byErgon Energy, iscontinuing to helpresidents project, whichisaFederal and QueenslandGovernment The ongoingsuccess oftheTownsville: City QueenslandSolar for theconcentrated deployment ofdistributed energy –inthis The aimoftheproject isto develop areplicable business model grid-supplied electricity consumption trend –bothbyreducing and business operators onMagneticIslandto defytherising initiative led byErgon Energy, iscontinuing to helpresidents The140 solarenergy systems thatErgon Energy − Over 70%ofhouseholdsandbusinesses onthe − Consideringthe15%increase inpeakdemand − sUsTAiNABiLiTY iNACTiON renewable energy from thesunannually. will generate more thananestimated 550mwhof has installed onmagneticisland rooftops to date thousands ofdollars inelectricity costs. assessment, collectively saving themtens of island have already participated inafree energy demand improvement of22%. CityprojectSolar equates to anoverall peak of 2009/10,the7%fall from 2008achieved bythe originally predicted for theislandfor thesummer

Sharing our our Sharing number of energy assessments performed on the island increases. Electricity consumption on the island is trending downwards, as the isLaND eNerGY use TreNDs DOWN as aWareNess GrOWs Bree Nott “ We are already sharing the

MWh expertise 18,000 19,000 20,000 21,000 22,000 that we’ve trialled.” of the energy saving solutions organisations to replicate some the same time helping other rest of the business... and at Solar City lessons learnt from the Energy Advisor JUN 07 Electricity Consumption Rolling MonthlyAverage DEC 07 project with the JUN 08 DEC 08 % Energy AssessmentsUndertaken JUN 09 DEC 09 JUN 10 0% 20% 40% 60% 80% 100% 43 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 REviEw Of OpERATiONs 44 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 Ri ev ew of Operations electricity billsandemissions (p19). simple steps to reduce theirelectricity use,andtherefore their early 2010,we are alsohelpingto empower ourcustomers to take Through our‘energy sense’marketing campaign, launchedin employee communications. achieve theproject’s goalsthrough community awareness and stakeholders suchasXstrata andMountIsaCityCouncilto help load tariffs. Theproject isalsoleveraging thesupportofkey pool pumpsandhotwater systems moved to economy controlled for whichErgon Energy hasprovided rebates, andanumberof heat pumpsystems have beeninstalled, 295homesinsulated, 500 completed upto July 2010.More than170solarhotwater or for theHomeEfficiencyCheckshave translated to more than Services were completed inafive monthperiodandreferrals to provide homeassessments. Over 1,800ClimateSmart Home with theQueenslandGovernment’s ClimateSmart HomeService The ‘Energy Savers’ program inMackayandMountIsapartnered homes solely withrenewable energy. year, theequivalent ofpowering 92average regional Queensland buildings. Thosesystems willnow generate around 705MWhper Townsville: Cityproject QueenslandSolar and85kWonourown owned solarphotovoltaic energy systems: 395kWthrough the Ergon Energy hasalsoinstalled more than462kWofcompany- bringing total expenditure thisyear to almost $1.4million. tariff undertheQueenslandGovernment’s SolarBonusScheme into thegridthrough the44cents perkilowatt hourfeed-in around $150,000permonthfor therenewable energy exported capacity ofmore than10,900kW. We are now payingcustomers connected to thenetwork have acombined maximumgenerating 270% from theendofprevious year. Allofthesystems now rates, supported by key community stakeholders such as Xstrata. schools in Mackay and Mount Isa with high engagement and participation Energy Savers’ student colouring competitions were conducted in 13 sugar industry. significant flow-on benefitsto thepeople ofMackayandthelocal Mackay SugarMillunderpinneditsconstruction, whichcreates output ofaplanned$120millionco-generation plantatthe This year, ourcommitment to purchase theexcess electricity the certainty ofincome required to make thedevelopments viable. through entering into Power Purchase Agreements thatprovide such assugarcane mills,hydro-electric plantsandawind farm businesses. We are supportinglarge renewable energy generators 65,000 customers purchase green energy for theirhomesand including solar,wind,hydroelectric power andbagasse. Over our energy requirements from renewable energy sources support to therenewable energy sector. We source 5%of generated renewable energy certificates andassuchprovides Ergon Energy isoneofthelargest purchasers ofQueensland packaging, weight andwaste. power poles andeven paper,to reduce emissions aswell as working withoursuppliers ofitems suchascable, transformers, in theirmanufacture andtransport. We seegreat potential in major components ofanelectricity network are energy-intensive they relate to greenhouse gasemission reductions. Manyofthe knowledge ofsustainable procurement practices, especially as S broad value to allparties. electricity industry peers for collaborative projects thatdeliver to attract contributions from councils, private enterprise and is alsoadesired outcome. Ergon Energy isleveraging thisfunding network, theassociated reduction ingreenhouse gasemissions While oneofthekey goalsisto reduce peakdemandonthe for energy conservation anddemandmanagementinitiatives. determination, Ergon Energy hasaround $100millionavailable Federal Governments andprovisions from therecent AER Governments –Through allocations bytheQueenslandand $100,000 peryear for local community programs (seeover). Ergon Energy alsorolled outthefirst Envirofund grants – electricity-related emissions. one year’s Clean Energy from Ergon Energy to reduce thecentre’s Townsville’s Worinda childcare centre received themainaward – their electricity useandtherefore theirgreenhouse gasemissions. to encourage communities to place aspecialfocus onreducing Champions Award. We developed thiscategory withtheorganisers Towns competition. We alsobegananew Energy Conservation C 228 bagsofrubbish. Australia Daywith more than130volunteers collecting more than groups. Theteam continued itsoutstanding supportfor Clean Up 3,500 trees andgrasses planted inpartnership withcommunity mulching activities ateightsites across thestate, witharound National Tree Dayinearly August 2009focused onweeding and based environmental initiatives. volunteered theirtimeto actively supportarange ofcommunity- of more than600employees whoover thepast seven years have many of our employees is the Ergon Energy Green Team consisting lives to respond to climate change.Animportant involvement for increasingly making decisionsintheirpersonal andprofessional as successful asitsemployees’ efforts andourpeople are E our flagshipenvir uppliers –Inrecent years, we have beenenhancingour mployees –Anorganisation’s achievements can only be ommunities –In2009/10,we continued thetwelfth year of onment sponsorship oftheErgon Energy Tidy the Cerebral Palsy League. during NationalRecycling Week, withnearly $4,000goingto Environment Day,anddelivered amobile recycling program the children ofErgon Energy employees to celebrate World during National Water Week, ran a colouring competition among The Green Team alsogave awaywater-saving shower timers endangered Grassland Earless Dragon ontheDarlingDowns. Mary River Turtle andanotherto protect therare and groups, includingonefundingvital research to protect the The Green Team alsoraised nearly $15,000for Landcare including supermarket trolleys, on Clean Up Australia day this year. a group of Save Our Waterways Now volunteers, cleaned up rubbish, – Loren Blauensteiner, Chris Delamont and Natasha Ryall – along with With help from the local high school, Ergon Energy Green Team members Butterfly drawn by Josie Desgrand (age 10) from St George. to celebrate World Environment Day. Pictured is an Australian Fritillary Children of Ergon Energy staff were involved in a colouring competition REFER TO PAGES 31-32ANd69. FOR MOREENVIRONMENTAL PERFORMANCE case sTuDY acTiON FOr cOMMuNiTY eNvirOFuND to help them realise their vision. management, especially energy conservation initiatives, of outstanding ‘grass roots’ environmental impact resources. As a business we want to support the pursuit the environment; however, they sometimes lack the Many in the community are positively contributing to THe cHaLLeNGe protection measures beingtaken up. likelihood ofenergy conservation andenvironmental community groups across Queensland,increasing the change response program, andbuildsthecapacity oflocal The program reinforces theobjectives ofourbroader climate alternative andrenewable energy sources. and western Queenslandto gainhands-onexperience with and patrons atlocal community events throughout central Management group. Thisisnow allowing schoolchildren mobile educational unitbytheSouthWest Natural Resource 19 community groups. Ahighlightwasthefit-outofanew The first round ofgrants wasdistributed thisyear to environmental projects. that engageQueenslanders inenergy conservation and equip thecommunity to develop andmaintain programs for not-for-profit community groups andorganisations to The $100,000Envirofund program provides fundingannually children from mundubbera state schoolgetting − injured endangered turtles to berehabilitated by − almost 100members oftheToowoomba community − supported initiatives are providing for: Other successful Envirofund- sUsTAiNABiLiTY iNACTiON hit the road in Charleville. renewable energy education unit mobile energy conservation and The Ergon Energy-funded of theKillalaCreek Rescueproject. bring environmental parkland backto life aspart involved inplantingmore than100trees to help over nineyears has released more than150turtles backinto the sea the CairnsTurtle Rehabilitation Centre –theCentre grow local organic food andreduce ‘food miles’ to become involved inAdopt-A-plot Gardens to 45 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 REviEw Of OpERATiONs 46 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 REviEw Of OpERATiONs

MaKiNG iTaLLHaPPeN

Investing in Investing our people our amandaFajak “ We’re enabling our strategic processes and systems.“ organisation, and in our people, the culture of the plan by investing in our Group ManagerBusiness Transformation processes and systems.“ organisation, and in our people, the culture of the plan by investing in our form of new technologies, to achieve greater operational efficiency. available to our employees to make informed decisions and providing the tools,developing frequently our inpeople the and the organisation’s systems and processes – improvingoperational the objectivesinformation and in the creation of a high performance culture. We’reErgon focused Energy on recognises the important role our people play in achieving our strategic and the community. strategic plan,andbenefitsto our customers, shareholders and Ergon Energy isbetter equippedto deliver theorganisation’s As aresult oftheOrganisation DesignReview (ODR)inlate 2009, T LOOK leadership teams. the capability ofourpeople andestablishing highperformance our processes andsystems withafocus onefficiency,building change isbeingachieved through streamlining andreviewing our employee baseandtheageprofile ofouremployees, cultural Given theregional nature ofourorganisation, thelow turnover of effective organisation. Energy becoming apreferred employer, andbeinganefficient culture isthefoundation ofexcellent customer service, ofErgon improvement. Thisongoingtransformation to ahighperformance organisation thatisaccountable, resilient andvalues continuous We are stepping upourefforts to create ahighperformance workforce capability. build employee engagement.It’s allaboutliftingourstrategic to empower ouremployees, develop ourleadership capability and To meetthechallenges ofthefuture itiscritical thatwe continue ever-changing employment market. workforce risks andopportunities,includingthechallenges ofthe ensure we have theworkforce solutionstoday to meettomorrow’s workforce planning process to deliver onourcommitments and In 2009/10Ergon Energy continued to focus onthestrategic L O efficiently continues to beapriority. skills andleadership to carry outtheirwork effectively and Ensuring ourpeople are equippedwiththenecessary knowledge, importance ofsafety, efficiencyandexcellence. high performance from itsemployees andaculture thatvalues the is onfostering aninternal environment thatexpects anddelivers from employees livingtheorganisation’s SPIRITvalues. Ourfocus behavioural anchors andstatements to describewhatisexpected day-to-day. Thishasbeensupported bytheintroduction ofnew that they are increasingly experiencing andlivingthevalues success –ouremployees inourlatest survey (p49)indicated We have alsocontinued to reinforce ourSPIRITvalues (p4)with continuous improvement andreducing bureaucracy. This hasled to anongoingfocus onincreasing accountability, 2009/10 we have looked closely at‘how we dothingsaround here’. o positionourselves to achieve ourstrategic prioritiesduring I R FT G A I NG O I N NG ISA A UR T T HO I ON

S T A W RA L C T H E E G DOTH A IC NG WO E BYD I R NG KFO S ESI RCE GN

CA P A B I L I TY D performance, productivity improvement andservice delivery (p51). strengthening theleadership focus andimproving safety improving theeffectiveness oftherole byclarifyingexpectations, There wasalsoagreater focus ontheWork Group Leaderrole – supervisors to deliver business outcomes. efficiencies thatcould beachieved, enablingmanagers and The focus ofDepot3PRwasto identifyimprovements and procedures andpaperwork) to reduce ‘waste’, orlost time. was to simplifythedepotenvironment (thethree P’s: processes, built managementcontrol system across ouroperations. Theaim project, whichcommenced in2008,withtherollout ofapurpose October 2009sawthefinalphasecompleted oftheDepot3PR to action. employees have abetter lineofsightfrom thebusiness strategy has beenusedto drive changewithinthebusiness sothatour management andtheErgon Energy operating framework, projects focusing onsystems, processes, policies,performance In additionto theorganisational restructure, asuite ofenabling page 62. stakeholders. Details ofthestructural changesare provided on and consultation withrepresentative industry unionsand required effective changemanagement,employee engagement Successful implementation ofthenew organisation structure pursue new business opportunitiesinacompetitive market. contestable partsofthebusiness, positioningErgon Energy to executive level andclearer separation oftheregulated and representation ofsupport and‘core’ network functionsatthe in aflatter, more accountable structure providing abalanced clear accountabilities andstreamline processes. Thisresulted The aimofODRwasto helpeliminate duplication, establish also beenimplemented, including theredesign oftechnical efficiency andeffectiveness, a revised facilities strategy has To ensure regional training can bedelivered withmaximum operational work groups andkey internal customers. across theregions with close relationships maintained withthe Service Groups. Thegroup now delivers allofourtraining delivery and Development, Apprentice ManagementandourCustomer established, encompassing staff from Technical Training, Learning In late 2009aconsolidated Training andDevelopment Group was each year intraining anddevelopment. and non-technical capabilities sowe invest more than$24million Ergon Energy’s workforce requires highlevels ofbothtechnical EVE LOP I NG O UR P E OPL E is A P RI O RI TY 47 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 Ri ev ew of Operations 48 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 Ri ev ew of Operations underpin successful delivery ofoursubstantial works program. will helpensure we have therightworkforce for thefuture to apprentices withactive training contracts. Theseapprenticeships our apprenticeship program. We currently have around 290 the regional winnerfor theMinister’s Award for Excellence for integral to ourfuture success. In2009,Ergon Energy wasawarded Ergon Energy alsocontinues to recognise thatapprentices are program withaccreditation from therelevant industry body. graduate ispaired withabusiness mentor andcompletes the whilst they develop core business andprofessional skills.Each cross-section ofbusiness areas through rotational placements The program isdesigned to give eachgraduate exposure to a Ergon Energy in the past 12 months, primarily in the engineering field. year program. A further eight have moved into permanent roles within 2010. Currently there are 25 graduates actively participating in the three Townsville played host to the Ergon Energy Graduate Conference in May organisational people capability for thefuture. and civilengineering,iskey to ensuringthatwe buildour engineering, accounting, customer service, humanresources business. Theprogram, whichcovers thedisciplinesofelectrical degree graduates to transition into professional roles withinthe Ergon Energy’s Graduate Program supportsrecent bachelor and preparations for thenew NationalPassport. as well asthedelivery ofover 80mainstream onlinecourses, switching andaccess training andthelive-line work training, succession program, enhanced NationalContact Centre training, investment inleadership programs, anew whole-of-business The training anddevelopment focus for 2009/10includedongoing Rockhampton commenced construction duringtheyear. Brisbane. Significant new training facilities inbothMackayand training facilities, aswell asapurposebuilttraining yard, in The highnumberofgraduating apprentices retained by the business eachyear the apprenticeship program. demonstrates the success of Ergon Energy ismaximising opportunities to transition as possible into permanent roles many existing apprentices as after they graduate –subject to resource requirements. identified risksand gaps. into theDiversity Program withmitigationstrategies developed for Strategic Workforce PlanningReporthave alsobeenincorporated opportunities implemented. Theoutcomes from theErgon Energy to move forward, areview wasundertaken andimprovement Following thesuccess ofthe2007-2010 Diversity Program, steps andpublishinganysuccesses. learning and improving onthe pilot before roll-out, taking small change process thatinvolved piloting initiatives first, incorporating also provided direction andfocus. Theprogram wasfuelled bya Engagement withexternal communities andstakeholders has groups andemployees. important supportfrom theBoard, executive, managers, work driven bythepassion andexpertise oftheDiversity Team andthe results –seetable over. Thesuccess ofthelast two years was concentrating onnumbers, hasseensteady andimpressive Our focus oncreating sustainable employment, rather thanjust backgrounds inparticular. people, women andemployees from non-Englishspeaking to provide opportunitiesfor AboriginalandTorres Strait Islander skills, experiences andperspectives. Theprogram hascontinued opportunity to fully participate andto bevalued for theirdistinctive where anemployees’ differences are valued andeveryone hasan Strategy andisaimedatcreating an‘inclusive workplace culture’ Er A apprentice program. This is seen as an important element to the success of the Indigenous benchmark buddy program to support our Indigenous apprentices. Our indigenous Buddies: During 2009/10 we introduced an industry rotation inthefield. include onthejobrotations through thesework areas and than 100different roles inthebusiness andthetraineeships Ergon Energy’s technical para-professionals perform more and technicians, withthenext intake now underway. developing more than60technical trainees asfuture designers In additionto theapprentice program, Ergon Energy iscurrently potential Indigenousapplicants directly. engaging AboriginalandTorres Strait Islandercommunities and Indigenous apprentice program continues to beeffective in In conjunction withourbroader apprenticeship scheme,our N gon Energy’s Diversity Program isfundamental to ourPeople I N C L USIVE , RES P EC TF U L WO R KPL ACE arget increased to 25%,asthe20%target establishedin2007was 1. meaningful engagements. our internal diversity capability andunderstanding for through (p41)we initiatives are suchaspowersavvy leveraging We respect theIndigenouscommunities we serve and employment opportunitiesfor IndigenousAustralians. ongoing dedication ofErgon Energy inproviding sustainable These nominationsare atestament to thecommitment and finalist inthe2010Reconciliation Employment Awards. Indigenous Australians’ category and a in theEmployment andInclusionof ‘Leadership andExcellence inDiversity finalist intheDiversity AtWork awards In 2009,Ergon Energy wasnamedasa retirement withcomplementary policiesfor flexible work options. pilot program whichassists ourageingworkforce to transition to We continue to enjoy thesuccesses from ourcareer transition link inourprogram to develop future leaders for Ergon Energy. pool candidates. OurWomen inLeadership Program isavital an increase inwomen inseniormanagementroles andsuccession significant increases to ourindigenousemployment numbers, Ergon Energy’s concentration ondiversity hasresulted in Management Women inMiddle Management Women inUpper Diversity Goals Background (NESB) Non-English Speaking Employees from a Attendants. Casual Power Station eg. Apprentices and Level Positions, A&TSI inEntry by 5 grades 9.0to 16.5) Senior positions(ie., A&TSI employees in Workforce (A&TSI) inthe Strait Islanders Aboriginal &Torres & technical roles) (engineering Non-traditional Roles Women in exceeded in2007. T non-traditional ≥50 additional ≥2.4% oftotal ≥25% management management ≥6 additional ≥5 additional ≥14% upper employees employees employees workforce Industry Power Systems. a Certificate IV in Electrical Supply Engineering at university, as well as an Associate Degree in Power year traineeship she is undertaking rural locations. As part of her four- Energy’s network in regional and distribution powerlines for Ergon design overhead and underground – Niki Cullington is learning to Engineering new career pathways 1 middle agtDescription/ Target roles ≥4%

identified asNESB 42 additional 46 additional 6 additional employees employees employees Formula 2.0% 2.6% 19% 21% reporting purposes. together, aswell asaseriesof questions for statutory satisfaction ofindividualemployees, how well groups work The ‘Have Your Say’survey includesquestions relating to the of agoodteam, jobsecurityandlikingthetypeofwork they do. working conditions compared withotherorganisations, beingpart identifying thetop reasons they stay withErgon Energy to bethe Around 80%oftheworkforce took partinthisyear’s survey, our survey target wasreached withastrong score of13. with theimplementation ofasignificant organisational change, and paybenefits.Althoughthetimingofsurvey coincided work group cooperation, performance culture, lifestyle balance results were alsoachieved across engagementattributes ofcross commitment our people have to working for Ergon Energy. Positive The results ofthe2010survey show thestrong level of to improve from anemployee perspective. understand where thingsare working well andwhere they need Our employee ‘Have Your Say’survey isakey feedback tool to and listen andrespond to theirconcerns. employee communications program, we aimto engageourpeople our success andoursustainability goals.Through ourextensive high calibre ofemployees across regional Queensland. safe work environment, we willcontinue to attract andretain a benefits, healthandwellbeing initiatives andahighperformance, Managers. Through acomprehensive offering ofrewards, employment contracts for SeniorManagers andExecutive the Ergon Energy UnionCollective Agreement 2008and employees are covered byaFederal Workplace Agreement, Working conditions for themajority(98%)ofErgon Energy’s required to complete refresher training every two years. as part of the Welcome Forum induction and all employees are undertake diversity training and bullying. New employees discrimination, harassment a workplace free from their obligations in ensuring all employees are aware of to the business to ensure that was developed and rolled out online diversity training tool workplace. In 2009 a new and discrimination in the eliminate bullying, harassment the business to avoid and support mechanisms within a number of education and In addition, we have established as aform ofprevention. been formed to consult onimproving ourprocesses andeducation comprised ofemployee, unionandemployer representatives has Following consultation withindustry unions,areference group striving to maintain aworkplace free ofbullying andharassment. Indigenous BuddiesandInductionTraining programs, we are Harassment Anti-DiscriminationOfficer (SHADO)Network, such asouronlineDiversity Refresher Training, theSexual bullying andharassment withintheworkplace. Through initiatives employees. Thisyear we have hadastrong focus onreducing is committed to providing asupportive environment for all With r C Empl A rea C T IVE oyee engagementandconsultation isseenascritical to t espect atthecore ofourSPIRITvalues, Ergon Energy i LY ng E a NG f air a A G I NG O nd su UR ppo P E OPL r t ive e E n vir onm e nt 49 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 Ri ev ew of Operations 50 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 Ri ev ew of Operations − − − of platforms: We have continued to communicate internally usingavariety and value oftheirindividualorteam efforts. understand theirrole inthebiggerpicture, aswell astheimpact means ourinternal communications are vital for ourpeople to The diverse nature andthegeographical spread ofourbusiness to ensure ourpeople are informed and engaged. levels. Thecommunications are distributed invarious mediums channels atwhole-of-business, business unitandfunctional Ergon Energy alsohasestablished internal communication Division Queensland)(CFMEU). Forestry MiningandEnergy Union(MiningandEnergy Services UnionofAustralia (ETUDivision),andtheConstruction, Electronic, Energy, Information, Postal, PlumbingandAllied Managers, Australia (APESMA),theCommunications, Electrical, (AMWU), theAssociation ofProfessional Engineers, Scientists and Engineering, PrintingandKindred Industries UnionQueensland Clerical andServices Union(AMACSU), the Automotive, Metals, with five nationalunions;theAustralian Municipal,Administrative, transparency that is commercially possible. Ergon Energy engages union stakeholders inanequitable mannerwiththemaximum Ergon Energy iscommitted to engagingwithourindustry management andindustry unionrepresentatives. committee meetings.Thesemeetingsare attended byemployee, and outwork solutionsthrough ourregular unionconsultative Employees alsohave theopportunityto discuss workplace issues vision for thenext five-year regulatory period. roadshow wasbeingrolled outto communicate thestrategic Ergon Energy. Atthetimeofwritingthisreport amajoremployee for employees to have inputinto the strategic direction of these events have beenimportant face-to-face opportunities during 2009/10.Hosted byexecutive managers across thestate, The Listening Forums, first launchedin2007,have continued our internal communication channel to all staff. and updates on strategic matters are published through Dailymail – conducting workplace visits. Following each Board meeting articles facilitate direct Board interaction with the workforce in addition to workforce this year. They established a dedicated email address to Our Board of Directors (p 58-59) continued to engage with our greater ownership ofthestrategy. employee understanding ofourcorporate strategy andultimately, Ergon Energy alsoinvests significant resources inbuilding −

Monthl T about ourstrategic prioritiesandspecificprojects. This isparticularly important for distributing information travel bookingsystem, e-Library, staff services and more. business unit,contacts, latest news, process documents, eNet employee’s home. the humansideofbusiness operations andposted to each e activities andlatest key reporting figures. and featuring updates onhigh-profile andbusiness-critical the seniormanagementteam from theChiefExecutive in anopenenvironment. group level thatallow for discussion oflocal andtopical issues eam Briefs–monthly meetingsfor employees heldatawork C onnect –abi-monthly A4colour magazine,highlighting –ourintranet site provides key information oneach y Business Brief–amonthly bulletin emailed to and Outstanding Achievement. Together, Apprentice/Technical Trainee, Customer Service, Innovation, recognised across the categories of Environmental Excellence, Working potential safety incidents and improve efficiency. He was one of six winners is being performed. Neale conceived the idea to reduce the number of ‘test tag’ solution, which acts as a memory jog when polarity testing Linesperson Neale McAsey was recognised in October 2009 for his safety to inspire by recognising individuals or teams who go beyond expectations. Now in their sixth year, Ergon Energy’s Above and Beyond Awards continue E In order to realise ourNetwork Vision(p26),we partnered with intelligence on advances in communications technology. positioned to enhance our core business and access first-hand release sites. By collaborating with the NBN Co, we will be well with the construction of the network in Townsville, one of the first in the National Broadband Network (NBN), which will see us assist or ‘UbiNet’ (p 29). We have also become an implementation partner are rolling out our own ubiquitous telecommunications network, To enable our people to better operate our network in the future we H − systems elements of the equation to lift network asset data quality. decisions, will effectively integrate the people, processes and which promise to significantly enhance future asset management purchase to an asset’s removal from the field. These efforts, all of our network asset data across the lifecycle – from the initial in the previous year, we began streamlining the management of data. Following the pole asset information improvements made We have also continued to build on the quality of our network asset energy managementsystems. our customer database, ourworks managementsystem andour major milestone inachieving aconvergence ofourdata sources; and deliver greater operational efficiencies,we have reached a On thetechnology front, to better supportour people intheirroles and accommodate distributed energy resources. technological advancements required to empower ourcustomers investments plannedfor optimisingasset management to the timeframes andassociated performance benefits;from the Strategy provides aroadmap oftheproposed initiatives, application offuture technologies. TheNetwork Technology −

nergex EA T news to jobvacancies. updated oneverything from safety notices andoperational Dail and previews ofbusiness activities. available to allemployees featuring updates, presentations D eam BriefD I NG DOWN TH yMail –emailnewsletter to keep ouremployees thisyear to develop astrategic framework for the V D –abi-monthly 20-minute production E T EC HNOLOGY R O A D FOr success a KeYeLeMeNT LeaDersHiP FrONTLiNe previously unmeasured skills are now quantifiable, − Ourwork Group Leaders are now better placed to − 158employees have beenengagedintheprocess, – sUsTAiNABiLiTY iNACTiON Management asearly asNovember 2010. with thefirst graduates dueto receive theirDiploma of The deployment oftheprogram extends through to 2011, as well aswritten assessment. on-the-job demonstration andthrough third-party testimony, the flexibility to assess competency through verbal questioning, diverse cultural backgrounds anddifferent learning styles with over thirtyyears’ experience. Itisaninclusive program supporting levels ofexperience from people new to therole to somewith The program participants range inagefrom 25to 63,withvarying employees are alsobenefitingfrom havingskillsthatare portable. the organisation’s needs.Beingbasedonnationalcompetencies, Institute ofManagementto develop theeducation curriculumfor We partnered withtheChifley Business SchoolandtheAustralian as well asaformal education component. These plansare now beingsupported bystructured coaching, and to truly understanding thebroader business challenge. essential to formulating individually tailored development plans countless flightsto visit78different work locations –thiswas 14 workplace assessors drove over 15,000kilometres andcaught The assessment process took over five monthsto complete – competency andpriorlearning service area responded to thiscall andwere assessed for More than158employees located across Ergon Energy’s entire interest inparticipatingtheWork Group LeaderProgram. Work Group Leaders, employees were invited to express their Following thedevelopment ofanupdated positionprofile for our our customers’ needs. particularly intheareas ofsafety, leading ourpeople andmeeting This group isseenascritical to thesuccess ofErgon Energy, we have focused onthedevelopment ofourWork Group Leaders. To enhance theoverall performance ofourfield-basedteams, case sTuDY as well asbetter workforce and succession planning. allowing for competency-based assessment, and safety objectives ontimeandbudget. execute theirresponsibilities to deliver performance efficiency andourcustomer focus. clarifying expectations around safety, operational our field-based teams – and operational efficiency goals. most importantly our safety priority – especially for the workforce in achieving our key strategic priorities, Ergon Energy’s success. As a business we need to engage skills to do their job well, ultimately to contribute to Our employees want to be empowered and to have the THe cHaLLeNGe I feel privileged to share the self-development It’s not about the technical aspects of the job; “ As a coach my focus has been on helping the solving skills. their capability andconfidence intheirleadership andproblem gain maximumbenefitfrom theprogram. Itisallaboutbuilding the business andhave beentrained to helptheparticipants of individualcoaching. Thecoaches are from across-section of now benefitingfrom 360-degree feedback andupto nine months To supportbehavioural change,ourWork Group Leaders are rosemariePrice

Customer ResponseandImprovement Manager everyday team.” journey with these colleagues, in addition to my from another angle and identify options. my role is to encourage them to look at things strengths they bring to a particular challenge... it’s about encouraging self-awareness around the links that they may not have been aware of. Work Group Leaders assigned to me to make the

leadership Showing Showing 51 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 REviEw Of OpERATiONs 52 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 Ri ev ew of Operations energy management requirements into their product set. effectively allowing the integration of Ergon Energy’s network and to Google’s spatial, mapping and 3D visualisation technologies, to benefit from Google’s rapidly evolving capability – through access has developed into an industry-first partnership that will allow us – now overlayed over Google imagery. Our relationship with Google from sensitive ecosystems to outage and network constraints data grown, with increasing layers of critical information sets – Our use of the Google Earth Enterprise technology has also GOOGL customers (p20-21). and enhance theself-serve transactions available to our automate ourGuaranteed Service Level related processes our internet platform asakey customer communication channel, Significant system investments have alsobeenmadeto update better manage the works plan. greater data uniformity and stability, and ultimately enable us to the business. The aim was to streamline the process and achieve seen major enhancements to the way work orders are used across Resource Planning (ERP) solution made in 2006. This year has effectiveness ofthe$75millioninvestment in an Ellipse Enterprise systems, we have continued to improve theoperational As partofourfocus ondeveloping ourinformation management Note: Thesefigures includepermanent, fixed term, casual employees andapprentices upto andincluding30June2010. T 65 + 55 – <65 45 – <55 35 – <45 25 – <35 <25 By Age Group Male Female By Gender Brisbane Southern Central Northern By Region classifications in these included of positions Examples All Employees h e W o E r P k AR fo TN r Worker Power Distribution Warehouse & Team Member Power Worker Attendant Power Station ce Pr ERS H 7 1276 279 3 494 133 8 1,282 282 o 011 10 0112 80 7245 87 1274 398 61 41 665 16 3412 311 73 60 I 242 3 3 f P G i l person S Technical Powerline Distribution Apprentice Linesperson Live Mechanic Electrical Fitter e ervice- R OW S

6 S & Assessor Technical Trainer Scheduler Leader GroupWork upervisor 3 24 132 1 20 118 6 97 367 1 39 30 110 100 4 34 143 7 103 371 416 64 126 51 18 4 17 2 4 A S E Designer/ Designer Systems Electricity Trainee Officer Estimating Designer Systems Electricity ystem lectrical dvisor 0 6 0 Professional Para- Auditor Asset Inspection Officer Civil Technical Para- professional Substation Design support efficienciesaround network designandmaintenance. environmental, cultural heritage, landuseissues, aswell as spatial accuracy ofthecadastre –enablingusto better consider which willallow usto benefitfrom thecontinuous improvement in across Queensland.Processes andsystems have beendeployed all ofthelandparcels, road easements,andotherboundaries database (DCDB)–thisdatabase ofcomputerised mapsincludes spatial information systems to thestate’s latest digital cadastral alignment oftheelectrical andnon-electrical assets withinour In linewiththisinitiative, we are well progressed withthe predicting andpinpointingarange ofasset risks(seeover). automatically detect andmappowerline assets inhighresolution, exploring theuseoflatest remote sensingtechnology to Economic Simulationprogram (ROAMES). Thisprogram is for Ergon Energy’s Remote Observation, Automated Modelling, The partnership willinitially provide thevisualisationtechnology 4 18 142 3 26 12 138 140 0 62 509 2 0 32 127 181 3 30 234 5 62 552 66 86 70 37 30 43 00 10 0 9 or Operator S C Officer Operations Network Controller Network y o

stem ntroller E A Representative Customer Care Project Coordinator Meter Reader Personal Assistant mployee dministrative 1,071 131 248 254 332 256 815 241 338 393 14 92 99 Managerial and Professional Trader Business Analyst Manager Area Operations 0 13 104 5 35 257 8 12 0 283 175 0 52 600 4 8 247 0 25 207 0 7 10 106 186 4 18 348 4 60 847 10 21 0 7 Manager S Manager General Executive Manager Group Manager General enior TOT 1,188 1,186 1,175 3,498 1,132 1,115 1,248 1,827 4,630 612 414 440 A 55 L meet electricity demand. street-by-street view, to help configured, right down to a the network to be better with ‘heat mapping’ allowing in network capacity planning, The data captured will assist case sTuDY future applications for thetechnology could also − The3Dvegetation modelsobtained willbetter target − Over thenext five years theROAmEs initiative – sUsTAiNABiLiTY iNACTiON for useinstrategic and operational business activities. ‘visual’ oftheentire network, andthesurrounding environment, equipped withthesesensorsystems. Thiswillrapidly capture a systematically flying over theelectricity network inanaircraft Using thisremote observation capability, we willsoonbe into powerline clearance zones. capability to automatically identifyvegetation encroaching The data captured hasallowed usto develop thefoundation rural networks usinglaserscanners anddigital cameras. of sixregional Queenslandtowns andaselection ofassociated The partnership hasled thisyear to theaerialremote sensing most notably inrelation to vegetation management. aerial technologies to achieve business improvements, industry partners to investigate theuseoffully automated University ofTechnology, theQueenslandGovernment and Since 2007Ergon Energy haspartnered withtheQueensland LeveL TO a HiGHer TecHNOLOGY TaKiNG development ofprecision ‘Gps’. community benefits–from economic modellingto the deliver whole-of-government cost savingsandbroader supply reliability andcommunity safety. our vegetation response, andultimately improve power vegetation managementalone. operational efficiencies around thedelivery ofour (see over) isexpected to achieve upto $44millionin community benefits–from economic modellingto the response planning. flood modelling and assist this year it was used to provide across south west Queensland response. In the major floods with our disaster management The ROAMES capability will assist The ROAMES capability will assist

technologies densities across the network. the vast area we serve and the relatively low customer operational efficiencies; a challenge made greater by in our service delivery, while at the same time increasing To respond we need to achieve continuous improvement and our customers’ service expectations are growing. In line with rising electricity costs, affordability concerns THe cHaLLeNGe

Advancing Advancing Manager Information Strategy James Bangay to better alignthisdatabase withthereal world.“ property boundariesandtherelated property descriptions – digital cadastre –essentially acomputerised mapof allof the The data from beable theaerialsensorswilleven to improve the growth area. ratesof aparticular of ourplanning,whether fordisaster anatural orto forecast scenarios. We’ll beable to usesimulations to area assist every environment, includingourassets, asenergy aswell demand The modellingwillalsoallow usto analyse thebuilt-up this. But itisbiggerthaneven amore anddeliver management works targeted response. This willallow usto more accurately scope vegetation understand vegetationspeciesandgrowth ratesindifferent areas. picture of vegetationaround ourassets, andhelpusto better business. Thelaserscanners willprovide acomplete management area of the thevegetation support “Initially, thisproject will ROAMES … Simulation –known as Modelling andEconomic Observation, Automated opportunities for Remote Talking abouttheadvanced inspectioninspection cyclecycle ofof fourfour years.years. yearyear insteadinstead ofof ourour currentcurrent assetasset bebe inspectinginspecting thethe entireentire networknetwork everyevery analyseanalyse thethe images,images, wewe willwill inin effecteffect airair andand usingusing computercomputer softwaresoftware toto By scanning the network from the 53 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 REviEw Of OpERATiONs 54 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 OUR ECONOMIC PERFORMANCE Competition Authority (QCA), and is recovered via the application of electricity distribution network, was determined by the Queensland Ergon Energy’s regulated revenue for 2009/10,from the use of our network of$44.9million. and customer contributions towards theelectricity distribution $1,473.9 million,electricity distribution revenue of $156.5million Other significant sources ofrevenue include energy sales of electricity tariff schedule. revenue collected from customers through thestate’s uniform of servicingourelectricity customers thatisnotcovered bythe is compensation from theQueenslandGovernment for thecost Service Obligationrevenue –this year totalling $251.6million– in franchise revenue andareduction incosts. OurCommunity Community Service Obligationpaymentfollowing anincrease retailer, Ergon Energy QueenslandPtyLtd,requiring asmaller to 2008/09.Themainreason for thisreduction wasdueto our $2,203.7 million,adecrease of$75.4millionwhencompared Ergon Energy’s total revenue andotherincome for theyear was Where doesourrevenue come from? of Queensland. by Deloitte Touche Tohmatsu, asdelegate oftheAuditor-General this document.ThefullAnnualFinancialReporthasbeenaudited comprehensive. For fulldisclosures, please refer to theCD Limited anditsControlled Entitiesandisnotintended to be in theAnnualFinancialReportfor Ergon Energy Corporation This sectionprovides abriefcommentary ontheinformation O serve industry benchmarks. primarily dueto favourable performance relative to retail cost to Ltd, were alsoabove expectations withanNPAT of$41.5 million, The financialresults ofourretailer, Ergon Energy QueenslandPty through ourefforts to improve efficiencyandproductivity (p15). supported byover $18millioninoperational savingsdelivered result, and$77.2millionfavourable to budget.Theresult was Limited achieved aNPAT of$171.9million–anexcellent financial Ergon Energy’s mainoperating entity,Ergon Energy Corporation ‘get fit’initiatives, while delivering onourprogram ofworks. cost managementandrealising efficienciesthrough anumberof The result wasachieved through astrong business widefocus on and anEarningsBefore Interest andTax (EBIT)of$478.3million. Queensland Government inourStatement ofCorporate Intent, (NPAT) of$166.5million,exceeding thetarget agreed withthe Ergon Energy delivered aconsolidated group NetProfit After Tax A N UR A F BO I N VE A N T CIA to the State Government, with the people of Queensland ultimately benefiting. economic development initiatives. Our financial performance also enables us to pay a dividend economically through local employment and purchasing, and through the support of local In addition to the economic value the service we provide delivers, however, we also contribute Electricity is increasing as a product of national significance and an economic enabler. O AR L G UR E RE T P PO R R OF T I

E T XPL EC RESU AI N LT E ONOM D IC with P ER F P related costs. with the10-year Government bondrate), whichincreased payroll employee provisioning (dueto falling discount rates associated the global financialsituationagaincontributed to anincrease in Purchasing Policy, to encourage local sourcing. Theimpactof totally $112.3million.Ergon Energy adheres to theState addition to alarge contractor base–withcontract payments Queenslanders –withtotal payroll costs of$489.1million,in economic contribution to Queensland.We employ around 4,600 Ergon Energy’s operating expenses provide asignificant Ului onthenetwork. forced maintenance, dueto theimpactofflooding andofCyclone 8.5% compared to last year, despite additionalexpenditure on Operating expenses amounted to $508.6million,whichwasdown and electricity purchases totalled $691.0million. For 2009/10, transmission network charges totalled $234.9million What are ourmainexpenditures? customer-initiated capital works during the year (p 25). the QCA allowance, despite the decline in demand experienced in contributions from our customers. These payments remained above by the QCA also includes an allowance for payments of capital market in regional Queensland. The regulated revenue determined and the retailers of customers who have entered the contestable to the network. The charges are billed to both our retail business network charges to customers and embedded generators connected R

MILLIONS $1,100 $1,200 O $100 $150 $200 $50 $0 I T E FO X C EE D 07 0620 092010 2009 20072006 2008 S R

E X P M E C T A T A I O N S N

CE retail operations. from the sale of our contestable *2006/07 had a one-off return realising efficiencies. focus on cost management and through a strong business wide shareholders, was achieved commitment to our government result, which exceeded our The $166.5 million profit E operational viability. Ergon Energy’s approved capital structure, and theorganisation’s the necessary fundingfor approved projects, themaintenance of This ispaidonthebasisofitsshareholders agreeing to provide unrealised fair value gainsorlosses onfinancial instruments. its shareholders expect, adividendof80%profit adjusted for Board to recommend, taking into account theinvestment return Dividend Policy –Ergon Energy’s dividendpolicyrequires the Queensland, a17.9%increase onordinary dividendspaidthisyear. $137.5 millionin2010/11,whichultimately benefitsthepeople of 2009/10 –willenable thepaymentofsignificant dividendsof The strength ofErgon Energy’s profit result –$166.5millionfor the QueenslandGovernment? What return dowe give to ourshareholders, maintained atAA. Ergon Energy’s long-term corporate credit rating hasbeen hedging andtrading activities. and otherfinancialliabilities($308.8million)mainly from the QueenslandGovernment asourshareholder in2009/10, payables ($94.2million),dividendspayable ($137.5million)to of $967.4million.Someourotherkey liabilitiesincludetrade The second largest liabilityisthenetdeferred income tax liability Corporation of$3,962.7million. liability isourinterest bearingloan withQueenslandTreasury programs andcash flow requirements. Thelargest individual this year withfundsdrawn down utilisedfor ourcapital works Ergon Energy’s total liabilitiesincreased to $6,036.9million What dowe owe? increase inCurrent FinancialAssets. The increase inthetotal asset basealsoincludeda$158.1million base, which includes mostly regulated electricity network assets. plant and equipment are the major components of our total asset saw the level of capital works expenditure fall in 2009/10. Property, situation, coupled with the cyclonic conditions and severe flooding requested capital works, as a result of the global financial capital expenditure program. A significant downturn in customer- property, plant and equipment to $7,495 million, which reflects the from a $594.4 million increase in the value of Ergon Energy’s total million to $8,698.3 million in 2009/10. This resulted primarily What are rgon Energy’s total asset base increased in value by $687.0 E rgon E nergy’s assets? ON r RE a ASSE

BILLION $10.0 MILLIONS $0.0 $5.0 22% 24% T 0% 2% 4% 6% 8% U T N V L U E I N 07 0620 092010 2009 20072006 2008 07 0620 092010 2009 20072006 2008

G V R ES O W T M S E

W N I T T H U P I N V ES T recent years. our assets grow substantially over year – has seen the total value of the network – $674.9 million this The ongoing capital investment in retail operations. from the sale of our contestable *2006/07 had a one-off return Assets to 5.7%. performance – lifting Return on we have improved our financial Through the efficiencies gained M E N T I N TH E

N E T WO R K 55 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 OUR ECONOMIC PERFORMANCE 56 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 OUR ECONOMIC PERFORMANCE 3. Return on average assets ratio revised for 2006/07 and prior2. years $370.6 based million on recalculated relates to thetotal return assets. of the proceeds on the1. Thesale 2006/07 of Powerdirect. results include a significant contribution from the sale of our contestable retail operations that year. ON ER Dividends Provided For S C Financing Activities Investing Activities Operating Activities Opening Cash S Net Total Liabilities Non Current Liabilities Current Liabilities Total Non Current Assets Current Assets S Total Net Profit After Tax In Equity Net Income Recognised Directly Superannuation Actuarial Asset Revaluation S Tax Expense Earnings Before Tax Finance Charges Depreciation Expense Operating Expenses Network/Electricity Purchases Revenue andOtherIncome Net Profit Interest Cover (times) Gearing (includingreserves) Return onAverage Equity R I Return onAverage Assets Total Capital Investment Dividends to NetProfit After Tax N H T T T ash Held a G C A A A t ARE OM T T T i A o E E E ssets A I ncome and E M M M E ssets

A N E E E

S ND E NT OF NT OFF NT OF T A R A fter Tax G T I Y N E VES C M CAS C O E I OMP R E N NT TM P xpense A H FLOW O N R E RE CIA A NT T H 3 I O L PO E I NFO N L N S SIVE I SI M R T M I T

I I ON A E N T D C I – ON OM C O E s t t t s s s s s s s s s s s s s t s s s s s t t t s s t t s – N S O L I D 2009/10 091 080 070 2006/07 2007/08 2008/09 2009/10 A ,6. ,5. ,2. ,3. 2,587.3 2,437.7 2,523.8 2,551.2 2,661.4 ,9. ,1. ,0. ,1. 6,651.6 7,715.7 7,100.5 8,011.3 8,698.3 ,3. ,6. ,7. ,7. 4,064.3 5,278.0 4,576.7 5,460.1 6,036.9 ,3. 7. 5. ,7. 737.9 3,326.4 3,802.4 1,475.5 5,693.9 957.8 3,916.8 659.9 6,102.6 1,613.2 4,682.2 777.9 6,321.3 779.2 5,001.9 1,035.0 6,980.4 1,030.9 7,570.1 1,128.2 2,246.8 4,209.6 2,598.3 2,279.1 2,203.7 765 829 756 468 (797.3) (416.8) (785.6) (822.9) (776.5) 234 234 101 239 (132.2) (240.1) (253.9) (460.9) (251.4) (180.1) (514.9) (1,200.6) (248.0) (223.4) (521.1) (1,903.4) (277.8) (1,419.1) (243.4) (555.7) (290.9) (1,037.7) (508.6) (925.9) T 98 91 43 06 45.1% 50.6% 54.3% 59.1% 59.8% 8. 7. 9. 1, 222.9 518,3 198.3 370.6 284.2 4. 4. 0. ,1. 300.2 1,118.8 202.1 144.0 144.2 247.7 1,198.1 162.9 129.3 166.5 6.)(52 6.)(56 (68.8) (85.6) (67.1) (55.2) (68.4) 3. 1. 1. 955.4 289.9 118.4 470.3 509.7 260.0 116.6 388.3 32.5 222.9 137.5 433.1 575.8 518.3 419.4 156.6 198.3 533.5 370.6 6. 2. 6. ,9. 144.2 1,198.1 162.9 129.3 213.0 166.5 1,283.7 230.0 185.5 234.9 0. 4. 4. 0. 705.4 806.5 841.4 844.3 806.1 E .%51 .%4.%5.8% 47.7% 6.6% 5.1% 6.4% .%53 .%2.%5.9% 22.7% 5.7% 5.3% 5.7% 3 0 3 0 61% 80% 73% 90% 83% 121. 92(93 156.1 93.4 (79.3) 39.2 (112.4) 105.4 14.7 77.8 81.2 72.4 .x31 .x70 4.4x 7.0x 3.7x 3.1x 3.2x D $M . 6.)(62 3162.7 33.1 (66.2) (63.1) 8.8

A CC O U N 2008/09 T S

S U $M M M A R Y 2007/08 $M 2006/07 $M 1 1 2 2005/06 2005/06 87.5 $M instruments. gains or losses on financial for unrealised fair value 80% profit dividend adjusted return on investment) an shareholders expected (taking into account Our dividend policy requires all ouroperations. for and outflows cash inflows thenaturereflects ofthe The StatementOfCashFlows the end of the financial year.the endoffinancial the shareholders’ equityat up and Liabilitiesthatmake Position depictstheAssets The StatementOfFinancial ofourassetbase. revaluation operations andthe controlled andadministered for its surpluses ordeficits equity arisingfrom operating changes totheshareholders’ This statementshows activities duringtheyear. earningsof theordinary by equity hasbeenincreased to whichtheshareholders’ demonstrates theextent The IncomeStatement / Finance charges. Depreciation and Amortisation Earnings Before Interest & Tax, on current borrowings. = adequately meet the interest Shows our ability to Equity x 100. funds. = Debt / Debt + owner's funds versus borrowed our activities are funded by the prudential level to which Our gearing demonstrates & closingequityx100. After Tax ofopening /Average Ergon Energy. =NetProfit shareholder, in hasinvested asour the Government, generated onthemoney This represents thereturns closing assetbalancesx100. Tax ofopening& /Average = EarningsBefore Interest & assets togenerate earnings. ofour Reflects theefficiency a O C network andbroader internet requirements. Ergon Energy’s operational communications network, SCADA 2009/10. Ithasalsodelivered arange ofinternal services for has continued to grow itsexternal commercial business during offering wholesale high-speeddata capacity. Nexium’s business Telecommunications –alicensed telecommunications carrier Telecommunications PtyLtd,trading asNexium Ergon Energy’s othersubsidiaryisErgon Energy by theQueenslandCompetitionAuthority. government-set electricity tariffs (notifiedprices) asdetermined Ergon Energy QueenslandPtyLtdcan only offer customers the government-owned ‘non-competing’ electricity retailer, services to customers inErgon Energy’s retail area. Asa Ergon Energy QueenslandPtyLtdprovides electricity retail are overseen by the Board of Ergon Energy Corporation Limited. connection and supply of electricity to its customers. These activities network to ensure the adequate, economic, reliable and safe reasonable terms and to operate, maintain and protect its supply as far as practical, connection to its supply network on fair and Distribution Authority and the Ergon Energy Corporation Limited’s responsibilities under its Act1993. Corporations Act 2001,except asotherwiseprovided bytheGovernment Owned Corporation, isgoverned bytheprovisions oftheCorporations Ergon Energy Corporation Limited, awholly Government-owned Ergon Energy QueenslandPtyLtd. were Ergon Energy Corporation Limited anditssubsidiary, Ergon Energy’s principaloperating companies during2009/10 Our A P practices inlinewiththeseprinciples follows. –anoverviewGovernment OwnedCorporations ofourgovernance the QueenslandGovernment’s CorporateGovernance Guidelines for Corporate Governance Principles andRecommendations, aswell as developed Stock Exchange inlinewiththeAustralian (ASX) Ergon Energy’s corporate governance practices have been implementation oftheOrganisation DesignReview (p47). our network’s MinimumService Standards (p33);andthe health andsafety performance (p35);performance against Energy Regulator’s Distribution Determination (p18);workplace During 2009/10themajorgovernance matters were theAustralian monitoring by the Board, Executive Leadership Team and our senior management teams. our stakeholders. This is supported by ethical leadership, risk assessment and performance comprehensive process for managing the business with integrity and in the best interests of Ergon Energy operates within a corporate governance framework, which provides a RI ND O N O C CI ompany VERSI PL R E 1–L GHT P S tructure A Y S OL R I D FO Electricity Act 1994 (Qld) U T ND A E T I ON

GO S FO R M A V N are to allow, A ER G E M E NT N A those approved byitsshareholders. Detailed shareholder Governance Manual,whichincludesa Code ofConductbasedon The Board ofSPARQ SolutionsPtyLtdhasaCorporate through ICT. effective services efficiently, andimproving business performance costs, withafocus onintegrating ICT into thebusiness, delivering the business’s strategic prioritiesandhelpreduce operating focus ofthejointventure thisyear hasbeento continue to support solutions andservices to bothErgon Energy andE which provides Information andCommunication Technology (ICT) joint venture withE Ergon Energy Corporation Limited isalsoashareholder ina amended from timeto time. Ergon Energy managementandgovernance policiesas Ergon Energy Corporation Limited Board andapplicable have adopted theDirectors CodeofConductapplicable to the company. ThesesubsidiaryBoards, whichmeetregularly, Ergon Energy Telecommunications PtyLtddirectors oftheparent Ltd consists ofseniorexecutives oftheparent company andfor own boards, whichinthecase ofErgon Energy QueenslandPty The activitiesofthesubsidiarycompanies are overseen bytheir Our N – – Quee E   E Minis E T Comp r reasurer andMinister for nergy andMinister for Trade conomic Development C gon n ter for Natural s E a l e ny a n – – su i – E nd n

er

S (Nexium Telecommunications) Er St c b S p rgon Energy Queensland o G gon Energy Telecommunications si ar gy ruc r nergex o d po T Q c ver iaries S o ra t olutions r A ure nm t po R e esources, Minesand Limited –SPARQ SolutionsPtyLtd, d T e ra

jo nt t P E i E i

nt on Sh ty Ltd mployment and ve are

M l i nt m P hold i ures t t E y Ltd e d ( N i EEC ng P nergex Mi ty Ltd L) T Continued page 62. n is t ers . The 57 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 Cr o poRATE governance statement 58 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 CORpORATE GOvERNANCE sTATEmENT Pty LtdandamemberofallErgon Energy’s Board Committees. Limited. Heisalsoadirector ofErgon Energy Telecommunications Arrow Energy Limited andanon-executive director ofTully Sugar and related technologies. DrCraven isDeputyChairmanof and publishesinternational standards for allelectrical, electronic Committee, whichistheleading global organisation thatprepares Dr Craven isaboard memberoftheInternational Electrotechnical used byparticipantsintheAustralian NationalElectricity Market. Future Exchange energy-related futures andoptionsproducts a company whichhasexclusive managementrightsto allSydney to theendof2007,DrCraven wasChairofd-cyphaTrade Ltd, its international power andenergy portfolio. For afour-year period Asia-Pacific region, andserved ShellCoalasGeneral Managerof Director ofNRGAsia-Pacific, responsible for itsinvestments inthe also operates thewholesale electricity market. HewasExecutive Transpower, whichowns andmanagestheNationalGrid 2007, DrCraven wasCEOoftheNew ZealandGovernment-owned incorporated into whatisErgon Energy today. From 2003until enter thecompetitive electricity retail markets, whichin1999was company established to enable Ergon Energy’s predecessors to From 1995until1997,hewastheCEOofenergy retailing the international energy industry to theChairmanship. and regulatory complexities, bringingformidable expertise in encompasses theenergy andresources sector, commodity trading Dr RalphCraven hasaprofessional background which One oftheindustry’s most respected andin-demandfigures, Independent Non-Executive Director CHAIRMAN Dr raLPHcraveN BEPhDFIEAust FIPENZFAICD CPEng ThE BOARD Of DiRECTORs John Bird Dr RalphCraven Wayne Myers Gary Humphrys Susan Forrester Helen Stanton Tony Mooney 9 November 2006 is pone reappointment Date First appointed 1 October 2008 1 October 2009 1 October 2008 1 October 2008 5 July 2001 1 July 2005 1 October 2008 1 October 2008 1 October 2008 Ergon Energy PtyLtdfor aperiodofseven years. previously served asDeputyChairmanoftheelectricity retailer of Electricity Supply Industry Superannuation (QLD) Ltd. He and ofESIFinancialServices PtyLtdandisDeputyChairman Mr Bird isChairoftheQueenslandLaborGroup ofCompanies in Brown andBird CertifiedPractising Accountants inMackay. Telecommunications PtyLtd.Hewasformerly aManagingPartner Diligence Committee. MrBird isalsoadirector ofErgon Energy Risk Committee, aswell asChairmanoftheAER2010Due Chairman andoftheBoard’s AuditandFinancial experience anddirection to Ergon Energy inhisrole asDeputy As aRegistered CompanyAuditor, MrBird provides considerable Independent Non-Executive Director DEPUTY CHAIRMAN JOHN BirDFCPA FAICD FTIAFAIST CRAVEN DR RALPH Resigned 20July 2010 current Term of appointment 3 years 3 years 2 years 2 years 3 years 2 years BIRD JOHN Term in Office To Date 20 months 2 years 2 years 4 years 9 years 5 years 1 year BeiNG ‘aLWaYs saFe’ as well asthePeople Committee. member ofErgon Energy’s AuditandFinancialRiskCommittee, (Chairman) andStVincent’s andHoly SpiritHealthLtd.Heisa currently holds directorships withtheSEQWater GridManager roles inthewater, energy, miningandhealthindustries and years, MrHumphryshasundertaken Board andrelated committee taxation, IT,procurement, riskmanagementandaudit.Inrecent a range ofdisciplines,includingfinance andaccounting, treasury, senior executive roles inboththeprivate and publicsectors across industries to theBoard. Achartered accountant, hehas held more than30years ofexperience intheenergy andmining Appointed duringtheyear underreview, GaryHumphrysbrings Independent Non-Executive Director GarY HuMPHrYsCA GAICD is alsoamemberofErgon Energy’s People Committee. Credit UnionLtdandtheBrisbaneFestival PtyLtd.MsForrester Risk Committee), GoldCoast Parklands, QueenslandProfessional Boards ofShineLawyers Ltd(where sheserves ontheirAuditand business leaders, andserves asanon-executive director onthe CEO Institute, aprofessional development forum for CEOsand management andstrategy. SusanisChiefExecutive ofThe MBA withMelbourneBusiness School,specialisinginchange architecture) duringwhichtimeshecompleted anExecutive treasury andprofessional services firms(legal, consulting and gathered whilst in executive managementroles incorporate spanning thepublicandprivate sectors. Thisexperience was experience inthelegal, governance and humanresource areas, Forrester bringsto theBoard more than20years ofcommercial Originally trained asabankingandfinance lawyer, Susan Independent Non-Executive Director susaN FOrresTer EMBABALLB(Hons) idio eicimusaped unti rem et ipient et quame voles fugiasimus solorepudae. Ut quam audit, net litatem nobitiis delleni hicaero magnam, suntint, quas excearum reptatiunt. Aria quiassundae maxima andebis dolorep uditas mint Intro para Boristiae nat velenis doluptu ribuscid qui acerchi ciducipitas doluptate quuntium FORRESTER SUSAN HUMPHRYS GARY MYERS WAYNE Committee, aswell astheOperational RiskCommittee. He wasamemberofErgon Energy’s Audit andFinancialRisk Superannuation Board andasadirector of the Port ofTownsville. Enterprise Limited. Hepreviously served ontheLocal Government also theErgon Energy representative ontheBoard ofTownsville Australian Government’s SolarCitiesProgram. MrMooney was with Ergon Energy whichhelpedwinthebidto bepartofthe regional centre. AsMayor, hechampionedapartnership development whichtransformed Townsville into abooming a periodofunprecedented sustainable urbanandinfrastructure than 30years. Duringhis19years as Mayor, MrMooney oversaw Townsville CityCouncilasanelected representative for more government to Ergon Energy’s Board. MrMooney served the economic development, community engagementandregional Tony Mooney brought extensive experience ininfrastructure, Resigned asDirector on20July 2010 TONY MOONeYBEdBA(Hons)FAICD DirecTOrs HOLDiNG POsiTiONs DuriNG THe rePOrTiNG PeriOD Diligence Committee. Committee andisamemberofErgon Energy’s AER2010Due Company Directors. Shechairs Ergon Energy’s Operational Risk Institute ofMiningandMetallurgy andAustralian Institute of strategy development. MsStanton isamemberoftheAustralian engineering projects to coordinating business improvement and she hashadresponsibilities ranging from managingmajor Senior Operations EngineerandSixSigmaLeaderatBHP Billiton, business process analysis andchangemanagement.Previously a improvement consultant, specialisinginstrategy implementation, Ingham-based engineerHelen Stanton isanindependentbusiness Independent Non-Executive Director HeLeN sTaNTON BEGAICD Chairman ofErgon Energy Telecommunications PtyLtd. Committees andChairofthePeople Committee. MrMyers isalso of Ergon Energy’s AER2010DueDiligence andOperational Risk Australian Water (Queensland)PtyLtd.MrMyers isamember Mr Myers isChairmanofLoganDevelopment Working Group and Technology andTelecommunications industry for over 30years. – abusiness consulting service. Hehasworked intheInformation Mr Myers iscurrently theManagingDirector ofDinorden PtyLtd Independent Non-Executive Director WaYNe MYersMAICD STANTON HELEN MOONEY TONY 59 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 CORpORATE GOvERNANCE sTATEmENT 60 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 CORpORATE GOvERNANCE sTATEmENT Ltd andSPARQ SolutionsPtyLtd. businesses. Johnisadirector ofErgon Energy QueenslandPty of businesses includinglarge publiccorporations andprivate and general management.Hehasworked for adiverse range functions. Johnhassignificant accomplishments infinancial of finance, asset owner, strategy development andregulation sustainability ofallaspectsthebusiness through the provision John Hooperisresponsible for managingtheprofitability and CHIEF FINANCIALOFFICER JOHN HOOPerBEcon (Accounting) CPA Queensland PtyLtdandSPARQ SolutionsPtyLtd. Association ofAustralia andisChairmanofErgon Energy asset managementobjectives. Ianisadirector ofEnergy Supply in thedelivery ofErgon Energy’s record works program and people management,over recent years Ianhasbeeninstrumental State Electricity Commission ofVictoria. Witha strong focus on in theprivate contracting industry, Powercor Australia andthe Ergon Energy: experience gainedthrough managementroles Ian hasbrought extensive electricity industry experience to our shareholders. Since hejoinedthebusiness in2000, delivery expectations ofourcustomers, the community and priorities and,ultimately, for meetingthefinancialandservice Ian McLeodisresponsible thebusiness’ overall direction and CHIEF EXECUTIVE iaN McLeODFAIM LEADERship TEAm OUR ExECUTivE McLEOD IAN HOOPER JOHN development bodiesandEnergy SkillsQueensland. Queensland community, andisontheboards of bothregional organisational restructuring. Peter isactive inthecentral South Australia through deregulation andtheassociated involved inthetransformation oftheelectricity industry in experience from trade roles to management.Hewasdirectly a wealth ofindustry, leadership andchangemanagement Energy’s asset managementplanningto fruition.Peter brings of delivering theprogram ofwork thateffectively bringsErgon of Ergon Energy’s distribution business, includingallaspects Peter Billingisresponsible for theoperational effectiveness EXECUTIVE GENERALMANAGER, OPERATIONS PeTer BiLLiNG a long involvement withtraining andeducation. Neil isvery active intheCentral Queenslandcommunity with Queensland electricity industry for more than35years. service andmanagementexperience, havingworked inthe Neil hasextensive engineering,operational, retail, customer maximise theefficientandeffective managementoftheassets. program ofwork across thedistribution business inorder to strategy andnetwork performance, aswell asfor definingthe Neil Lowry isresponsible for Ergon Energy’s asset management EXECUTIVE GENERALMANAGER, ASSET MANAGEMENT NeiL LOWrY BEngGradDip MgmtRPEQ LOWRY NEIL BILLING PETER BeiNG ‘aLWaYs saFe’ establishing franchise networks andwithinpetroleum retailing. and hasheldseniorpositionsrepresenting thebusiness sector, Officer oftheAustralian Technical College NorthQueensland customer service experience. Shewaspreviously ChiefExecutive Electricity Market. Roslyn hasconsiderable business and Ergon Energy’s franchise retail operations intheNational customer interface, theNationalContact Centre; andfor delivery to customers, includingtheoperations ofourmajor Roslyn Baker isresponsible for service strategy andservice EXECUTIVE GENERALMANAGER, CUSTOMER SERVICE rOsLYN BaKerBComMBAGAICD and engineering. following acareer inhumanresources, managementconsulting services. MalLeechhasmore than10years’ industry experience management, business improvement initiatives and administration relations, training anddevelopment, environment, change functions includinghealthandsafety, humanresources, industrial cultural changethrough theleadership ofthe‘people-related’ Mal Leechisresponsible for business improvement and EMPLOYEE ANDSHAREDSERVICES EXECUTIVE GENERALMANAGER, MaL LeecHGradDipBusAdmin BEng Ergon Energy QueenslandPtyLtd. generation andtransmission to distribution. Jimisadirector of of knowledge across allsectors ofindustry development, from 40 years experience intheelectricity industry, Jimhasawealth and delivery ofemerging products andservices. Withmore than businesses withinErgon Energy, whichincludestheidentification manages thedevelopment ofnon-regulated, non-traditional environmental impactofourown operations. Thebusiness unit electricity network, while atthesametimeminimising greater energy efficiencyandreducing demandonErgon Energy’s electricity supply. Thebusiness unitisresponsible for promoting sustainable waysto provide customers withasecure andreliable Jim Chisholmisresponsible for findingthemost innovative and AND MARKETDEVELOPMENT EXECUTIVE GENERALMANAGER, ENERGY SUSTAINABILITY JiM cHisHOLMBEHonsMBADipFS DipI&CMAICD idio eicimusaped unti rem et ipient et quame voles fugiasimus solorepudae. Ut quam audit, net litatem nobitiis delleni hicaero magnam, suntint, quas excearum reptatiunt. Aria quiassundae maxima andebis dolorep uditas mint Intro para Boristiae nat velenis doluptu ribuscid qui acerchi ciducipitas doluptate quuntium CHISHOLM JIM LEECH MAL BAKER ROSLYN engineering andICT roles withinErgon Energy. formation ofSPARQ Solutions, Peter heldvarious management, priorities anddeliver maximumvalue. Priorto leading the Solutions provides are alignedwiththebusiness’s strategic leadership team isto ensure theICT supportservices thatSPARQ joint venture withENERGEX.Hisresponsibility ontheexecutive Ergon Energy’s Information andCommunication Technology (ICT) Peter Effeney istheChiefExecutive Officer ofSPARQ Solutions, CEO SPARQ SOLUTIONS PeTer eFFeNeYBEngHonsBScMBAGAICD Queensland Rail and the Gold Coast City Council. of Australia’s largest and fastest growing organisations, including executive positions, operational roles and directorships in some qualifications as a company secretary, Graeme has held senior some of Australia’s top national law firms. In addition to his formal has held senior in-house commercial legal roles and worked with him broad-ranging private and public sector experience. Graeme Ergon Energy. Graeme joined Ergon Energy in 2008 and brings with services, and monitoring high level compliance functions across of the Ergon Energy Board, providing risk management and legal Graeme Finlayson is responsible for managing the requirements GENERAL COUNSELANDCOMPANY SECRETARY GraeMe FiNLaYsON BA(Hons)/LLB(Hons)MBA SPARQ SolutionsPtyLtd. Justin isadirector ofErgon Energy Queensland PtyLtdand management andthebusiness’s response to climate change. and socialresponsibility agenda,especially inthearea ofdisaster stakeholder expectations, to Ergon Energy’s strategic challenges extensive industry knowledge andastrong appreciation of championing thebrand andcorporate reputation. Justin brings understanding andinsightsthroughout the business, and stakeholder engagement,promoting customer andstakeholder Justin Fitzgerald isresponsible for customer andother CUSTOMER ANDSTAKEHOLDER ENGAGEMENT EXECUTIVE GENERALMANAGER, JusTiN FiTZGeraLDMCommGradDipStats BBus FITZGERALD JUSTIN FINLAYSON GRAEME EFFENEY PETER 61 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 CORpORATE GOvERNANCE sTATEmENT 62 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 Cr o poRATE governance statement of Corporate Intent (p79 organisation; theseare formulated basedontheStatement Chief Executive, whichlinkto thestrategic objectives ofthe The Board setsKey Performance Indicators (KPIs)for the and monitoring achievement ofstrategic objectives. improvement, aswell astherole oftheBoard insettingdirection roles, functions,relationships, process andcontinuing are working effectively, includingoverall board performance, Committees oftheBoard atleast every two years to ensure they The Board reviews itsown performance andthatofthe performance oftheChiefExecutive andthegroup basedon policy document;Delegation ofPowers the Board. Thesematters are outlinedinaBoard Charter anda management, however, specifically reserves certain matters for the company’s business andaffairs. Itdelegates functionsto The Board hasoverall responsibility for themanagementof in review. the remaining Directors were appointed priorto theyear Gary Humphryswasappointed to theBoard inOctober 2009, board candidates. of Women, whichmaintains aregister ofwomen assuitable across government, includingtheQueenslandGovernment Office appointment process shareholding Ministers consult broadly behalf ofourregional Queenslandcustomer base.Aspartofthe a regular basisfor theirexpertise andabilityto contribute on Board performance, allowing new members to beselected on term ofoffice. Thisactsasareview mechanismfor enhancing Act1993,forwith theGovernment OwnedCorporations aset appointed byQueensland’s Governor-in-Council, inaccordance governance oftheorganisation. Directors oftheBoard are Ergon Energy’s Board ofDirectors isresponsible for thecorporate The Board of Limited andE comprising executives from bothErgon Energy Corporation agreements guidethegovernance ofthiscompany withitsBoard, From page 54. Our Or Busi g C a n ustomer & n E Finance & ess i mployee & sa E nergex E rgon t Un ngagement S S i o Ex ervices ervices n i t B E a ecu s S o nergy S l takeholder Limited, whomeetonaregular basis. ar

trategic S S t t Ch hared d r ive Lea ). TheBoard thenreviews the

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u Ex irec re d ecu ers t o t h rs ive i . p EEC Tea L m A C sset Management ustomer Governance C orporate S ervice The community representatives. engagement withErgon Energy’s employees, aswell aswithlocal stand-alone solarpower supply system. Thesetripshave allowed York, west ofLaura to inspecttheproperty’s Ergon Energy built station andwindturbines,aswell asPinnacle Station onCape remote NorthernOperations including,Thursday Island’s power Windorah andEmerald. InadditiontheBoard visited several concentrators atWindorah andemployees atCharleville, Quilpie, occurring. Thistripalsoincludedvisitsto Ergon Energy’s solar significant coal miningandcoal seamgasdevelopments are to theQueensland’s SouthWest andtheBowen Basin,where Ergon Energy’s service area. During2009/10visitswere made Board andmanagementto visitingdifferent partsof Queensland, isalsoreflected bythecommitment ofthe of ouroperations, andbeingable to represent regional The importance placed onmaintaining anin-depthunderstanding the board paperformat, quality,content andtimeliness ofissue. presented to theDirectors for consideration anddecision,to changes to thestructure, format andcontent oftheboard agendas its finalreport inJuly ofthatyear. Thereport recommended Need Committee established bytheBoard in2009delivered Act2001.TheBoardand theCorporations AgendaandInformation requirements Act1993 undertheGovernment OwnedCorporations to effectively discharge theirdutiesinaccordance withthe the Board isofcritical importance inenablingtheDirectors The ongoingprovision oftimely andrelevant information to through theorganisation. in accordance withthis process. Thisprocess cascades down performance evaluation ofseniorexecutives wasconducted the achievement oftheseKPIs.Duringthereporting perioda shareholders and community, now andinthefuture (p47). to efficiently andeffectively deliver benefitsto itscustomers, organisational structure thatwould better enable thebusiness a majorOrganisation DesignReview. Theaimwasto create an Team (ELT), profiled onpage60-61,withtheimplementation of Late 2009sawanumberofchangesto theExecutive Leadership E xecutive Leadership Team - - - - Comm a aer P Oper eople udit &Financial E S i tt Market Development nergy P 2010 Due Diligence ational AR ees C Q Operations ommittee S S of ustainability & olutions PtyLtd R

th isk I nternal e C R R bo ommittee isk isk & ar C d A ommittee C C udit, Business ommittee ompliance

INDEPENDENT REPORTING the Windorah solar concentrator. Director John Bird and Power Station Attendant Ross Ward during a tour of Heberlein, Director Gary Humphrys, Solar Farm Attendant Andy Presuss, Chief Executive Ian McLeod, Manager Regional Services South Dave I Chief Information Officer role. on anarmslength basisviaacontractual relationship through a services; intheprevious modelSPARQ Solutionswasmanaged strategic imperatives. Thisisanew modelfor theprovision ofICT that technology solutionsare fully integrated withErgon Energy’s Solutions jointheELT. Representation atthislevel willensure The year hasalsoseentheChiefExecutive Officer ofSPARQ for non-competitive retail customer services. stakeholder relations, aswell asanexecutive positionaccountable of ourprevious structure, suchassingle pointaccountability for The new organisational structure maintains thekey strengths safety standards. of work, aswell asreactive work to time,budget,qualityand as ‘Service Provider’, isaccountable for delivering theprogram program ofwork. Thenew Operations business unit,initsrole responsible for developing theasset investment planandthe Management business unit,asthe‘Asset Manager’,isnow of executive managementroles from seven to eight.TheAsset to form two new business units,thereby increasing thenumber Most notably, thissawtheprevious Energy Services group split opportunities, includingnew asset solutions,products and cross-functional committee thatreviews new business established, withitsfirst meetinginJuly 2009.Thisisa This year anew OpportunityReview Forum (ORF)was also with theAsset ManagementPlan. asset-related capital andoperating expenditure inaccordance facilitates theefficientandeffective managementofallnetwork business changewithintheinvestment portfolio. TheNIRC service, product andasset research anddevelopment, and an appropriate balance between asset investments, customer The IRCoperates atabusiness-wide, strategic level to ensure (IRC) andtheNetwork Investment Review Committee (NIRC). governance bodies,includingtheInvestment Review Committee the ELT issupported byahierarchy ofapproval authoritiesand For thedevelopment andprioritisationofinvestment programs nvestment R eview Functions that they mayincurasaresult of,orbyreason of,beingaDirector. them to theextent allowed bylawinrespect ofcertain liabilities period of10years after ceasing to bea Director andto indemnify that were provided to themduringtheirterm inoffice, andfor a with eachDirector, givingthemrightofaccess to alldocuments The company hasentered into aDeedofAccess andIndemnity in theperformance ofitsduties. consultants orexperts from timeto timeasitconsiders necessary company’s expense, suchlegal, accounting orotherservices, to fulfillitsresponsibilities andhastheabilityto retain, atthe has theauthorityto conduct ordirect anyinvestigation required expense, subjectto thepriorapproval ofthe Chairman.TheBoard the rightto seekindependentprofessional advice atthecompany’s The Directors’ CodeofConductprovides for eachDirector to have of strengths andlisted somekey areas for improvement. making processes atErgon.” Thereport alsodetailed otherareas experience, expertise and talents to bringto bearonthedecision- appears to beafunctioninggroup ofindividualsallwhomhave engaged to conduct thereview concluded that“theErgon Board practice outcomes for thebusiness. Thereport bytheconsultants systems inplace to ensure thattheBoard isdelivering best members commenced inJune2009.Thereview supportsthe September 2008,aperformance review oftheBoard andits Following onfrom thechangesinBoard composition madein Act(1993). with theGovernment OwnedCorporations appointed byQueensland’s Governor-in-Council, inaccordance Board doesnothave anominationcommittee astheDirectors are Chief Executive Officer isexercised bythesameindividual.The Recommendation 2.1,furthertherole oftheChairmanand and are notindependentasassessed against BestPractice ASX Queensland PtyLtdare executives oftheErgon Energy group Board to beindependent.TheDirectors ofErgon Energy circumstances. AlloftheDirectors are considered bythe case-by-case basisbyreference to eachDirector’s individual When makingtheassessment, materiality isjudgedona CorporateGovernanceASX Principles andRecommendations. assessed bytheBoard against thefive criteria listed inthe are non-executive directors. Theindependence ofDirectors is Telecommunications PtyLtd,includingtheChairman, All oftheDirectors oftheparent company andErgon Energy committees are discussed inthisstatement. undertaken byeachcommittee during2009/10,where the are summarised,along withastatement ofthekey activities committee operates according to acharter. Thesecharters (p6 attended byeachDirector, are available intheDirectors’ Report Due Diligence Committee, aswell asthenumberofmeetings Operational RiskCommittee, People Committee andtheAER2010 Membership details oftheAuditandFinancialRiskCommittee, Employment Opportunities. management, andotherpeople issues, suchasEqual and safety, community safety, environmental matters, disaster Queensland sustainability challenges, suchasworkplace health issues faced byErgon Energy, manyofwhichare around regional established committees to consider andrespond to particular T P maximum value isachieved through cross-business collaboration. organisation’s strategic andoperational prioritiesandthat services, to ensure future investment isalignedwiththe o assist withthedischarge ofDirectors’ duties,theBoard has RI N CI ). Aspartofthecompany’s governance framework, each PL E 2– S T RUC T URE TH E BO AR D TO A DD VA L UE 63 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 Cr o poRATE governance statement 64 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 Cr o poRATE governance statement to theCMC. any investigations andreporting theresults oftheinvestigations any suspicionsof officialmisconduct to theCMCandoverseeing The ManagerInternal Auditisalsotheliaisonofficer for referring investigation, nodisciplinary measures were required. During theyear, three allegations were received, butafter substantiated, appropriate disciplinarymeasures are applied. the ManagerInternal Auditfor investigation and,where theseare All allegations lodged usingtheFairCall Service are referred to standards, ensuringfairness to allconcerned. principles embodied inthevarious whistleblower’s protection fraud. Theservice isindependently operated andreflects the corporate policy–suchastheCodeofConductorsuspected members ofthepubliccan report unethical conduct, breach of established in2003,asameansbywhichstaff, contractors and We have alsocontinued to operate theFairCall Service, page 48-49. measures andachievements related to diversity can befound on Strategy, to supportaninclusive workplace culture. Details onthe through theDiversity Program asapartofErgon Energy’s People Ergon Energy alsohasadiversity policy,whichisimplemented of developing managers. Centre thatwasestablished to objectively assess thebehaviour development programs, aswell astheLeadership Capability such astheManagementFoundations andotherleadership Our code isintrinsicto ourlearning anddevelopment programs, corporate values intheemployee CodeofConductStandards. the Board andissupported byourcontinuing focus onembedding practice ethical behaviour. Thisexpectation comes directly from Ergon Energy’s managementisexpected to actappropriately and Interest Guidelinesto assist withthesegovernance objectives Charter andaformal Directors’ CodeofConductandConflicts Director ofthecompany. TheBoard ofErgon Energy hasaBoard practices andpoliciesintheperformance oftheirdutiesasa management. EachDirector isexpected to have regard for these been adopted bytheBoard andimplemented atalllevels of sound corporate governance practices andpolicieshave standards ofintegrity andpropriety. To meetthiscommitment, legally, ethically andwithstrict observance ofthehighest management are committed to conducting allbusiness activities our strategic plansand,ultimately, ourvision.TheBoard and supporting ourcorporate values and,therefore, to realising fundamental partoftheorganisation’s culture. Itiscritical to Ergon Energy embraces ethical business practice asa D P Guidelines of ConductStandards Procedure, andReportable Conduct Policy, Employees Codeof Conduct Policy, Employees Code The updated policydocumentsare, Fraud andOfficialMisconduct owned Corporations to notifytheCMCofofficialmisconduct. 1 January2010alsorequires chiefexecutives ofGovernment- misconduct. TheIntegrity Act2009thatcame into force on Commission (CMC)thepower to investigate suspicionsofofficial legislation thathasgiven thestate’s CrimeandMisconduct This year Ergon Energy hasupdated itspoliciesinlinewith attention oftheotherDirectors. all new declarations ofinterest byDirectors are brought to the reviews theregister ofDirectors’ interests ateachmeetingand material personal interests, andhow to dealwiththem.TheBoard procedures for thedisclosure ofDirectors’ standing interests and statutory dutiesofDirectors apply andtheBoard follows normal Limited andtheothercompanies inthegroup. Accordingly, the Act2001appliestoThe Corporations Ergon Energy Corporation RI ECISI N CI ON-M PL E 3–P A . K I NG R OMOT E

E TH ICA L A ND RES PON SI BL E

. suspected officialmisconduct to theCMC. the establishment ofareporting framework to report cases of compliance withtheprovisions oftheIntegrity and Act(2009) and guidelinesthedelivery oftraining to employees for 2010, theCommittee oversaw areview ofpolicies,procedures to Government-owned Corporations (GOC’s) from 1January coverage oftheCrimeandMisconduct Commission (CMC) With thepassing oftheIntegrity Act(2009)whichextended ethical practices. to promote strong corporate governance, financialprobity and An ethicsandfraud survey wasconducted to provide afoundation Statements could besigned. respect to thepreparation andcontent oftheRegulatory Reporting and wassatisfiedthattheDirectors’ ResponsibilityStatement in representations, madeallappropriate enquiriesofmanagement that theCommittee hadreceived allnecessary management by theCommittee anditprovided representation to theBoard with theQueenslandCompetitionAuthority(QCA) were reviewed The Regulatory ReportingStatements prepared for lodgement the changingfinancialenvironment. Corporation for theCommittee to fully consider thesematters in was conducted withrepresentatives from QueenslandTreasury management strategies andrefinancing issues. Aworkshop conditions appliedbyQueenslandTreasury Corporation anddebt the Committee focused itsattention to thelending terms and Against thebackground oftheGlobal FinancialCrisis, Act2001. imposed bytheCorporations compatible withthegeneral standard ofindependence ofauditors during theyear, bytheQueenslandAuditOffice oritsdelegate was auditors andwassatisfiedthattheprovision ofnon-auditservices, The Committee reviewed theindependence oftheexternal financial requirements underitslicence. during thefinancialyear Ergon Energy hascomplied withallthe overseen bytheCommittee anditendorsed thecertification that to theAustralian SecuritiesandInvestment Commission was The lodgement oftheAustralian FinancialServices Licence report financial integrity ofthecompany. raised inthemanagementletter constituted ahighriskto the auditors noneoftheinternal control, accounting orothermatters Committee anditwasnoted thatintheopinionofexternal the auditofstatutory financialaccounts wasreviewed bythe The managementletter issued bytheexternal auditors following Annual FinancialAccounts andDirectors’ Report. representation letters andrecommended thattheBoard adoptthe for theErgon Energy Group andthesupportingmanagement This year theCommittee reviewed thestatutory financialaccounts are available intheDirectors’ Report(p6 as well asthenumberofmeetingsattended byeachDirector, Membership details oftheAuditandFinancialRiskCommittee, financial risks,regulatory reporting andcompliance issues. program to provide ongoingassurances onfinancialintegrity, approves andmonitors Ergon Energy’s in-houseinternal audit the executives, aswell asindependentexternal auditors, andit charter approved bytheBoard ( The AuditandFinancialRiskCommittee operates underaformal A F P I RI udit andFinancial N N A N CI CIA PL E L 4– RE PO SA R F T E R I G NG isk UAR C ommittee D I NT E G ) andreceives reports from RI TY I N ). business decisions on what customers’ value. State Government, as our shareholder, and our regulators – focusing the plan. Service delivery expectations are also clearly reinforced by the increasingly customer-driven and enabling the realisation of our strategic Our customer engagement program is helping the organisation to become Financial RiskCommittee Chair. also hasaccess to theBoard ofDirectors through theAuditand resolution ofissues raised inreports. TheManagerInternal Audit Risk Committee onprogress against theInternal AuditPlanand ensures itsindependence byreporting to theAuditandFinancial the finances oroperations ofErgon Energy. Internal Auditalso access to the ChiefExecutive to discuss anymatter relating to the General Counsel/CompanySecretary butretains unrestricted The ManagerInternal Auditreports for administrative purposesto performance (KPI)results. Management Information System usedto capture andreport risk areas suchasExcessive Leave Balance Reductionandthe and approval processes. Otherauditreviews covered specific documenting andtesting key controls includingmanagement and Warehousing andInventory. Thesereviews focused on included significant auditsofFixed Assets, Contract Management and controls over assets, systems andactivities.Thisyear’s plan operational auditsto assess therisksandadequacyofprocesses Financial RiskCommittee. Inaddition,we conduct anumberof is established bytheauthorityofErgon Energy Auditand governance processes. TheErgon Energy Internal AuditCharter improve theeffectiveness ofriskmanagement,control and by bringingasystematic, disciplinedapproach to evaluate and Our Internal Auditfunctionhelpsusaccomplish ourobjectives through auditors contracted by the organisation or its subsidiaries. function covers allofErgon Energy’s operations, eitherdirectly or regulatory reporting requirements. Thescope ofourInternal Audit the Auditor-General ofQueensland,to meetgovernment and audited byDeloitte Touche Tohmatsu (Deloitte), asdelegate of Ergon Energy’s annualaccounts andfinancialstatements were of theperformance statements inthisreport. Standard ISO14001.Manyoftheseprovide external assurance International Customer Service Standards andEnvironmental 4801 Occupational HealthandSafety, Electrical Safety Legislation, Other auditswe regularly undergo includeAustralian Standard ISO 9001certification for ourTransmission andProject Services. certification we needto dobusiness, suchasQualityAssurance of world-class practice and,insomecases, to gainorretain the Ergon Energy submitsto anumberofexternal audits inpursuit external andinternal audit riskmanagementandinternal control systems are sound − company’s financialstatements are founded onasound − company’s financialstatements present atrueandfair view, − for approval, provided aformal statement to theBoard thatthe: and ChiefFinancialOfficer, whenpresenting financialstatements In addition,aspartofmanagingfinancialrisk,theChiefExecutive and operating effectively inallmaterial respects. the Board compliance, whichimplements thepoliciesadopted by system ofriskmanagementandinternal control and accounting standards and operational results inaccordance withrelevant in allmaterial respects, ofthecompany’s financialcondition INFLUENCE Influence on Influence environment iNFLueNce OFsTaKeHOLDer GrOuP ONTHeBusiNess reporting requests. government andregulatory relationships andto respond to The business hasestablished dedicated teams to manage environmental protection. health andsafety, employment practices, privacy and performance targets, publicsafety, probity, occupational communication obligationsto theGovernment around our Ergon Energy alsohasestablished policiesthatcover our and generally meetstheexpectations ofourshareholder. the business isconsistent withtheGovernment’s energy policy (1993). Thisensures thattheoperation andstrategic direction of regime prescribed Act bytheGovernment OwnedCorporations Government viaregular briefingsandthrough thereporting The Board andtheexecutive engagewiththeQueensland Government shareholder reporting business decisions. our customers andotherstakeholders are shapinganddriving Throughout thereport there are alsonumerous examples ofhow report andthemateriality ofthesustainability issues faced (p2). It isthisunderstanding thathashelpeddefinethecontent ofthis social, economic andenvironmental goals. our corporate socialresponsibility andsupportsourstakeholders’ maintain our‘licence’ to operate. Italsohelpsusbetter define making, deliver onourbusiness priorities,grow ourbusiness and engagement enables usto provide more informed decision- understanding ourstakeholders’ needsandexpectations through In additionto meetingourdisclosure obligations,clearly and complexity of engagement depends on the stakeholder group. and the degree of involvement desired by our stakeholders. The level We are committed to balanced disclosure appropriate to the issue our operations orcould effect ourabilityto serve ourcustomers. who asindividualsoragroup could potentially beimpacted by employees (includingrepresentative unions)andsuppliers, regulators, industry associates, customers, communities, Broadly, ourstakeholders are ourgovernment shareholders, decisions relating to theissues thataffect them. activities inatimely andaccurate mannerandto beengagedin is thatourstakeholders have arightto beinformed aboutour One ofthekey principles ofourStakeholder EngagementPolicy stakeholder engagement PriNciPLe 5–MaKeTiMeLY aNDBaLaNceDDiscLOsure Contractual Negotiation Operational LEVEL OF Mandatory business Control Impact Fragmented Individual Customers - Customers Individuals Suppliers Employees Informal Network Community Groups Retailers Other Coalitions Formal HOLDERS CONTROL (Independent) Representatives Regulators Associates Industry Customer DEGREE OFORGANISATION as Regulators Government Government Able toNegotiatefor theGroup Government as Government Shareholder Unions Representatives 65 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 CORpORATE GOvERNANCE sTATEmENT 66 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 Cr o poRATE governance statement Our s 2009/10 and2010/11are provided ontheattached CD(p79 of ourquarterly shareholder reporting. AsummaryoftheSCIfor Energy andMinister for Trade. Thesecommitments form thebasis Development, andtheMinister for Natural Resources, Minesand – theTreasurer andMinister for Employment andEconomic objectives, strategies andtargets for ourshareholding Ministers our performance agreement, whichoutlinesourcorporate As aGovernment-owned Corporation, thisdocumentisineffect for eachfinancialyear withinitsStatement ofCorporate Intent. Ergon Energy documentsitscorporate performance commitment five years (p18). Determination for 2010to 2015forms thefoundation for thenext last five year regulatory periodto anendandtheAERDistribution corresponds to the regulatory control periods. 2009/10 brought the network plans.Ergon Energy usesastrategic planningmodelthat and theformulation ofitsannualperformance commitment and (p 26),to provide anoverarching framework to guidethebusiness, long-term planningdocuments,includingtheNetwork Vision Our Strategic Plan,whichisreviewed annually, alignswithother Energy’s performance commitments to itsstakeholders. Management Plan,asthekey documentsthatcover Ergon it relates to theStatement ofCorporate Intent andtheNetwork S we face? What issues do expectations? stakeholders’ What are our Ann trategic Planningand Environmental ua trategic planningframework iscovered here particularly as S l c

St an ra t e g ic P S long term? adopt over the direction to strategic appropriate What isthemost l R t a rategic eporting nn Network i ng P Pr l an C ycle V o i cess sion the Board. and approved by Shareholder level are negotiated at Corporate Intent and Statement of The Corporate Plan next five years? measures for the performance priorities and specific corporate What are our Corporate Annual Report. tabled inParliament with the corresponding Industrial Relations Plan.Thisdocumentis performance targets andourEmployment and agreement withourShareholders –including Ergon Energy’s one-year performance Corporate - - - - Drives Numerous P S

l t an atement of plans, etc. Netw Summer Pr Netw As set ManagementPlan longer term? coming year and both over the Corporate Plan, the delivery ofthe plan to support business unit How doeseach ). ork climate changerelated ork Augmentation Plans I n Business Unit tent P eparedness Plan l ans P Electricity Code.Itisapublicdocumentthatpublishedonline plan, prepared inaccordance withsection2.3oftheQueensland The Network ManagementPlan(NMP)isarolling five-year about-us/right-to-information The information released isavailable athttp://www.ergon.com.au/ with Government expectations andlegislative obligations. the release ofinformation into thepublicdomaininaccordance implementation andmaintenance oftheongoingprocess of A key objective oftheRight to Information Act2009isthe Principles asprescribed Act1988 . Privacy intheCommonwealth managing personal information complies with the National Privacy also responsible for ensuringtheprocesses for collection and to beofsignificant interest to thewiderpublic.Thisrole is the publication ofnon-personal information whichisconsidered Officer wasappointed to manageapplications for information and Information Act2009,aRightto Privacy Information andPrivacy With thepassing oftheRight to Information Act2009(RTI)andthe R previous year’s network performance. This report, andtheNMPitself,reports to ourstakeholders onthe reliable andsafe connection ofelectricity supply to ourcustomers. network withtheobjective ofdelivering anadequate, economical, annually to detail how Ergon Energy willmanageanddevelop its l ight to ans: I nformation and majorissues. against targets performing of how we are Board informed Executive and To keep the M o tl eot Quarterly Reports nthly Reports performance improvement plans. of ourfive-year augmentation and strategic response, includingdetails capability andkey challenges andour – thatdetails thedistribution network’s A publicdocument–publishedannually facing. issues we are targets andthe area against each key result performing in how we are informed of Shareholders To keep our M a . nagement Network P l an future challenges. performance and informed ofour stakeholders our broader aim to keep These documents Reporting Annual P u S blic u ite

and acompliance program basedontheAustralian Compliance Zealand RiskManagementStandard: AS/NZSISO31000:2009, management framework basedontheJointAustralia/New (eg. HealthandSafety andEnvironment), implemented arisk Ergon Energy has established policiesonthese andotherareas To effect itscommitment to riskmanagement andcompliance, − − − − − and compliance frameworks are to: The primaryobjectives ofErgon Energy’s riskmanagement appropriately andeffectively managed. obligations associated withthebusiness andthatthey are being able to demonstrate anunderstanding oftherisksandcompliance stakeholders. Itiscritical thatourDirectors andmanagementare expectations ofourshareholders, thecommunity andother and compliance frameworks are necessary inmeetingthe Ergon Energy recognises thateffective riskmanagement R P − − Ergon Energy (section115): Corporation (section114)andmayalsogive awritten direction to owned Corporation, ofapublicsector policythatisto apply to the may inthepublicinterest notifyErgon Energy, asaGovernment- reserve powers oftheshareholding Ministers provide thatthey Under Part Act1993the 10oftheGovernment OwnedCorporations Directions andNotifications active dialogue throughout theyear. broader government engagementprogram, to ensure there is shareholding Ministers andtheirrepresentatives, aspartofa The ChairmanandChiefExecutive have regular meetingswith these commitments and aCommunications Strategy Guidelinewhichembodies The Board hasapproved aDisclosure to Shareholders Policy contemporary governance practices. commitment to gobeyond themthrough theapplication of as determined bytheGovernment butdemonstrating our not only complying withlegislative requirements andpolicies as theultimate owners ofthebusiness. We are committed to Ergon Energy respects therightsofshareholding Ministers P

RI RI isk Managementand N N and diversification. identify andmaximiseopportunitiesf and meetingtheexpectations ofstakeholders as effectively andefficiently identify busines is appropriate ensur and strategies help theor Act1993. section 115oftheGovernment OwnedCorporations Er to all its subsidiaries. This will have a minimal impact. to Ergon Energy Corporation Limited and, as far as practicable, Sponsorships Policy, as amended from time to time, is to apply Owned Corporations Act 1993 that in accordance with section 114 of the I n October 2009, notification was made by the Government CI CI gon Energy hasreceived nodirections in2009/10under sist indischarging legal andregulatory requirements PL PL e theoverall strategic direction ofthebusiness E E 7– 6– ganisation achieve itscorporate objectives REC RES s prioritiesandallocate resources P OGN EC . C T TH ISE ompliance Frameworks

A E ND M

RI that the Sport and Recreation GHT A N S A OF G or growth E S

RIS H ARE Government K HOLD ERS

are available intheDirectors’ Report(p6 as well asthenumberofmeetings attended byeachDirector, Membership details oftheAER2010DueDiligence Committee, − preparation ofthe Regulatory Proposal sothatthe: Board ontheduediligence process conducted inrelation to the and oversight responsibilities byreviewing andreporting to the established to assist theBoard to fulfilitscorporate governance AER 2010DueDiligence Committee in2008.TheCommittee was to theAustralian Energy Regulator (AER)theBoard established its To managethesubmission ofErgon Energy’s Regulatory Proposal reported to theBoard thatrisksare beingmanagedeffectively. agencies. Basedontheseandotherassessments, management periodically for compliance byInternal Auditand/orexternal regulatory, procurement andfinancialreporting are reviewed Key riskareas, including healthandsafety, environment, − − a timely manner. Key outputsoftheseprocesses include: are identified,assessed, managed,monitored andreported in processes inplace to ensure thatriskandcompliance issues Ergon Energy hasrobust corporate andbusiness unitlevel any actions,ifrequired. is usedto determine theacceptability orotherwiseofrisksand Medium, Low, orVery Low. Arisktolerance andacceptability table based ontheseassessments, are rated aseitherExtreme, High, and non-financialconsequences andlikelihood ofoccurrence and, evaluating risks.Risksare assessed interms oftheirfinancial Reference Guidethatprovides guidance onassessing, rating and Ergon Energy has also developed a Risk Management Methodology on where appropriate. Management Framework have alsobeenreferenced anddrawn Organisations Internal Control Framework andEnterprise Risk elements andattributes oftheCommittee ofSponsoring Standard AS3806:2006.Indeveloping theseframeworks, − AER the revised Regulatory Proposals. and controlled theproject established to prepare theinitialand AER 2010Regulatory ResetSteering Committee, whichmanaged Regulatory Proposal andreviewed recommendations from the of adetailed work planfor thepreparation oftheRevised The Committee received regular reports regarding thecompletion the Draft Distribution Determination madebytheAER. the preparation ofaRevised Regulatory Proposal inresponse to oversaw ahighlevel duediligence structure inconnection with In discharging itsduties,the Committee implemented and

forecast intheRegulatory Proposal are reasonable. the capital expenditure forecast andtheoperating expenditure and theOperational RiskCommittee quarterly. address them.Thisisupdated andreviewed bytheexecutive prevailing atapointintimeandwhatactionisbeingtaken to contains details onthesignificant risksandcompliance issues an Oper executive andtheOperational RiskCommittee. These are reviewed andupdated quarterly andapproved bythe organisation, andthemitigationstrategies to managethem. details onthekey risksandcompliance issues affecting the Corpor Dir and business objectives; and Regulat 2010DueDiligence ectors can certify thatthekey assumptions underlying ate andBusiness UnitRiskProfiles thatcontain ory Proposal complies withalllegal requirements ational RiskandCompliance Issues Register that C ommittee ). 67 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 Cr o poRATE governance statement 68 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 Cr o poRATE governance statement limited to, Electricity Industry legislation, Workplace Health with particularemphasis onkey riskareas including,butnot the systems for monitoring compliance withlawsandregulations The Committee reviewed regular reports ontheeffectiveness of will accept for thekey risksincludedinthecorporate riskprofile. being developed to documentthelevel ofriskthatthecompany vision, objectives andstrategies. Riskappetite statements are potential to significantly affect theachievement ofErgon Energy’s risks whichsummarisethemore significant risksthathave the achieved byJune2015.TheCorporate RiskProfile contains 16key Units riskprofiles andto establish target riskratings to be Workshops were conducted to review theCorporate andBusiness and 2incidentsfor random testing for allemployees. provides for mandatory testing for employees involved inClass 1 The Committee endorsed aDrugandAlcohol Policy which taken to improve behavioural safety performance issues. were reviewed andthelessons from these incidentsandactions company’s overall safety results. ReportsonClass 1incidents to implement recommendations from thereview to improve the endorsed managementactionsincludingafive pointsafety plan review ofErgon Energy’s safety systems andpractices and a majorfocus oftheCommittee. Itoversaw anindependent Safety for employees andmembers ofthepublicremained the Directors’ Report(p6 the number of meetings attended by each Director, are available in Membership details ofOperational RiskCommittee, aswell as environmental risksandexposures, andclaimsmanagement. to healthandsafety, includingcommunity safety, aswell as and operational risksandoversight responsibilities inrelation This Committee assists theBoard initsresponse to business Operational AER’s FinalDistribution Determination. to theFederal Court,seekingreview ofseveral aspectsof the Australian CompetitionTribunal andaJudicialReview application arguable grounds to justify aMeritsReview application to the Committee recommended to theBoard thatthere are sufficiently In reviewing theAER’s FinalDistribution Determination, the relied uponbytheAERto assess theRegulatory Proposals. AER isaccurate andcomplete inallmaterial respects andcan be the effect thatallinformation anddocumentation provided to the Ergon Energy sothathecould provide astatutory declaration to The DueDiligence Committee alsoassisted theChiefExecutive of forecasts are reasonable. assumptions thatunderliethecapital andoperating expenditure Directors Certificate beprovided to theAERcertifying thatkey recommended to theBoard thataresolution bepassed thatthe senior managers andproject stream leaders, theCommittee received, theexternal consultants’ advice andsign-offsfrom Based onthework undertaken includingreviewing thereports and accurate inallmaterial respects. support thecontent oftheRegulatory Proposals wascomplete leaders thattheinformation anddocumentation provided to Sign-offs were received from seniormanagers andproject stream were submitted to theAER. and regulatory obligationsto ensure thatcompliant proposals modelling thatsupported theRegulatory Proposals andthelegal capital andoperating expenditure forecasts, thefinancial to beincludedintheRegulatory Proposals includingthesystem recommendations to theCommittee onaspectsofthematters External consultants were engagedto review andmake R isk C ommittee ). − − undertaken byErgon Energy: During 2009/10,thefollowing riskmanagementactivitieswere R − − − − asset categories andpublicliability. retention through deductible limitsandselfinsurance for selected of risktransfer intheform ofinsurance cover, andthelevel ofrisk review oftheinsurance program to determine anappropriate level The oversight ofriskmanagementwasextended through the and Planning. legislation, Native Title andCultural Heritage, andDevelopment Act 1993,theCorporations’ Law,Privacy, ConsumerProtection Opportunity, Trade Practices, theGovernment OwnedCorporations and Safety, Environmental Protection, Employment andEqual r e i r r isk Management coverage oftheorganisation’s insurable risks. Insurance Program wasundertaken to ensure cost effective the Board. on riskmatters to alllevels ofmanagement,including quality andtimeliness ofdata andsupportefficientreporting be finalisedin2010.Thisproject isexpected to improve the system project isnearing completion andisexpected to management around energy trading. Ofnote, adealcapture Steady improvements have alsobeenmadeto therisk compared to 2009 whentheyear ended$0.2millionpositive. we produced anend-of-year positionof$0.9millionpositive, realised Long-Term Energy Procurement (LEP)position, consistent. Asameasure ofhedgeperformance, beingthe to aninfluenzapandemic. plan to enable theorganisation to prepare for andrespond tsunamis. Work alsocommenced onthedevelopment ofa Sub Plan,whichsetshow the organisation willrespond to and submitted to theQueenslandState Government aTsunami Emergency ManagementPlans, Ergon Energy alsodeveloped testing andexercising ofDisaster Managementand Busines to key corporate risks. which willshow assurance activitiesperformed inrelation Assurance isfocused ondeveloping ariskassurance map its corporate objectives andstrategies. Thework onRisk level ofriskErgon Energy isprepared to accept inpursuing in Ergon Energy’s Corporate RiskProfile whichwillsetthe developing riskappetite statements for key risksincluded Unit Plans. profiles withErgon Energy’s Corporate PlanandBusiness and work wasalsoperformed to integrate andaligntherisk Profile andriskmanagementcompliance frameworks and theBoard to review theorganisation’s Corporate Risk process, workshops were heldwithExecutive Management Risk Profiles were reviewed andupdated. Aspartofthis respects inrelation to financialreporting risks. and thatthesystem isoperating effectively inallmaterial founded onasystem ofriskmanagementandinternal control Act2001,thattheframework295A oftheCorporations is Officer andChiefFinancialOfficer, inaccordance withsection to supporttheassurances provided bytheChiefExecutive and efficiencyofErgon Energy’s riskmanagementframework management andreported to theboard ontheeffectiveness nsurance Program : Areview ofErgon Energy’s 2009/10 nergy Trading Performance: Performance hasbeen isk isk Profiles: Ergon Energy’s Corporate andBusiness Unit isk ManagementFramework: Areview wasundertaken by A ppetite and s C ontinuity Management:Inadditionto annual A ctivities and R isk A ssurance: Work commenced on C ompliance − − − − − − The most notable compliance matters during 2009/10included: e s r c Er System andimprove integration withitsbusiness processes. Management System andHealthSafety Management commenced aninitiative to integrate theEnvironmental System to AS/NZSISO140012009/10.Thisyear Ergon Energy maintain certification ofitsEnvironmental Management of publication, eightcommon lawclaimsremain inprogress. paid out$522,984indamagesthefinancialyear. Atthetime received five WorkCover common lawclaimsfrom staff and Proceedings Act2002 andpaidanamountof$51,557.We also Ergon Energy staff andcontractors underthePersonal Injuries six Personal InjuryClaimsfrom external partiesand P electrical event orseriouselectrical incident. for failing to notifytheElectrical Safety Office ofadangerous infringement notice andafinefrom theElectrical Safety Office recorded inrelation to theincident.Ergon Energy received one under theElectrical Act2002.Noconviction Safety was Ergon Energy received onefinerelating to aprosecution load RECcompliance requirements. surrendered on14February 2010to meetits2009franchise Queensland wasalsoliable for 371,780RECsthatwere meet its2009GECcompliance requirements. Ergon Energy was liable for 1,197,514 GECsthatwere surrendered to Assessment Reportbytheduedate. Ergon Energy Queensland Ergon Energy lodged its2009calendar year LiabilitySelf Electricity Certificates (RECsandGECs).InApril2010, Ergon Energy metitsliabilityfor Renewable Energy andGas Type 1to 7metering. Provider Category B(meter services) andD(meter data) for Energy Market Operator (AEMO)accreditation asMeter the Metering ManagementSystem andmaintained Australian We have successfully achieved ISO9000re-certification for Oper connections andspecialmeter reads. in service order completion for activities,suchasnew Service Levels. There hasalsobeenasustained improvement as disconnection processes andapplication ofGuaranteed has identifiedahighlevel ofcode compliance inareas such EIC. Subsequentauditing,bothindependently andinternally, our customer service activitiesare inaccordance withthe A signific as possible to theseservice expectations (p33). endeavours to achieve performance levels thatare asclose Service Standards very seriously andwillcontinue itsbest Ergon Energy takes itsperformance against theMinimum Authority, for five ofoursixdistribution reporting categories. Service Standards (MSS) setbyQueenslandCompetition was unfavourable to theElectricity Industry Code’s Minimum operating constraints, network performance for 2009/10 As aconsequence largely ofcontinued safety-initiated A Class 4incident isclassified asaminorlocalised impact, heritage legislation resulting insignificant financialpenalties. involving asensitive environment orabreach ofcultural heritage impacts,aClass 1incidentisamajorimpact incidents usingafour-level scale. For environment orcultural afety Prosecutions and nvironmental ersonal ompliance withthe enewable gon Energy’s incidentmanagementframework classifies ations intheNational ant amountofwork hasalsobeendoneto ensure I njury E nergy andGas C C ompliance: Ergon Energy continues to laims: In2009/10Ergon Energy received E lectricity I nfringement Notices: In2009/10 E E lectricity Market (N lectricity I ndustry C ertificates: C ode ( EIC E M): ): −

En the random naturethe random of theseevents, they are to prevent. difficult number of measures inplace to respond to dueto this,however, animals, suchassnakes, contacting We ourpowerlines. a have Our mostfrequent environmental incidents involve birds andsmall c vir unfounded andtheremaining sixwere resolved. 11 complaints relating to customer privacy matters, five were access, modification or disclosure. During 2009/10 we received information from misuseandloss andfrom unauthorised security systems andprocedures to protect thepersonal that holdourcustomer data are governed bystrict data contained in the in accordance withtheNationalPrivacy Principles (NPPs) per required undertheCodeofPractice. areas to develop Environmental ManagementPlansas Ergon Energy isnow mappinglinecorridors through these protected areas suchasnationalparksandstate forests. arrangements andenvironmental standards for working in with theQueenslandGovernment whichcovers procedural of Electricity Corridors inQueensland’s Parks andForests Er Protection (Waste Management) Regulation 2000. into compliance withDivision3ofPart 6oftheEnvironmental insulating oilfrom service. TheplanbringsErgon Energy scheduled Polychlorinated Biphenyl(PCB)contaminated Environmental Plan(TEP)for removing anddisposingof of Environment andResource ManagementTransitional Er assessment andremediation ofotherprioritysites. and Rockhampton, we have aprogram to undertake site were operational onThursday Island,Normanton, Hughenden site contamination associated withtheoldpower stations that F government agencies. there have beennoenvironmental breaches notifiedto or 2Environment orCultural Heritage impactand, impact. Ergon Energy hadnoincidentsresulting inaClass 1 reported. Oftheseeightwere Class 3and150were Class 4 with anEnvironment orCultural Heritage impactwere requiring minimalornoremediation. Atotal of158incidents ollowing onfrom 2008/09andErgon Energy’s focus onthe ustomer Privacy: We are continuing to protect theprivacy of gon Energy hasfinalisedaCodeofPractice: Maintenance gon Energy completed ahead ofschedule, aDepartment onm sonal information collected andusedduringouroperations e nt a l i n Federal Act 1988. Privacy All of the repositories ci d e nt s OTHER VEGETATION MANAGEMENT SOIL MANAGEMENT MANAGEMENT HAZARDOUS SUBSTANCES OIL &FUELMANAGEMENT FAUNA MANAGEMENT 69 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 Cr o poRATE governance statement 70 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 Cr o poRATE governance statement current remuneration practices. approved bytheshareholding Ministers were updated to reflect market conditions. Inaddition,Executive Remuneration Guidelines remain relevant to theupdated company strategy and emerging ensure thattheremuneration andbenefitsoffered to employees endorsed theremuneration andbenefitsprogram designedto needed to supportthestrategic prioritiesofthecompany. Italso execute thecorporate strategy, includingthecompetencies defines theresources, skillsandculture required to effectively The Committee endorsed thepeople strategy framework which senior executives to positionscreated from thisreview. Committee oversaw theselection process for theappointmentof to deliver anefficientandeffective organisational structure, the Following thereview ofthemanagementstructure undertaken People than for statutory superannuation. or at-riskplanandare noteligible for retirement benefitsother Directors ofthecompany donotparticipate inanyvariable reward payment for theirrole asdirector of acompany. Non-executive of thecompany. Executive directors donotreceive additional for expenditure incurred inperforming theirroles asDirectors are setbytheState Government, while reimbursement wasmade Directors’ emoluments,asaBoard orCommittee member, Directors are remunerated separately from theExecutive. their approval ofthepayment‘atrisk’. provisions ofErgon Energy’s Executive Remuneration Guidelines, of thecompany’s overall performance and,consistent withthe Any at-riskpaymentiscontingent upontheBoard’s assessment agreement madethrough ourStatement ofCorporate Intent. a range ofkey indicators. Thisisinlinewiththeperformance performance ofthecompany andtheirindividualefforts against at-risk orvariable component isdirectly linked to boththeoverall Accounting Standard AASB124.Theeligibilityofexecutives for an in theDirectors’ Report(p6 number ofmeetingsattended byeachDirector, are available Membership details ofthePeople Committee, aswell asthe organisational culture andlearning anddevelopment. management, industrial relations, employee engagement, responsibilities inrelation to remuneration, performance working for Ergon Energy andfulfillingtheBoards’ oversight long-term andsustainable approach onissues relating to people The People Committee assists theBoard indeveloping astrategic, Report (p67-72 Directors andexecutives are reported intheAnnualFinancial and individuallevel. Details ofremuneration to non-executive payments basedonperformance atthecompany, business unit The remuneration strategy involves theallocation ofat-risk to team andorganisational goals. ensure employees are aware ofwhatthey needto doto contribute retain employees, incorporate current industry benchmarksand and current employees inorder to attract highcalibre employees, framework which is considered to be attractive by both prospective As partofourHumanResources Policy we have aremuneration flexible andperformance orientated. its vision,salariesandsalarypackagingmust becompetitive, necessary to deliver onthecompany’s strategic planandachieve Ergon Energy recognises thatto attract andretain thepeople P RI N CI PL C ommittee E 8– RE ), consistent withtherequirements ofAustralian M U N ERA T E ). F AIR LY A ND RES PON SI BLY commence withErgon Energy to thetimethatthey leave. an aspiration thateachemployee issupported from thetimethey profile for eachErgon Energy employee. Thisisunderpinnedby and wellbeing onanend-to-end basisandto buildahealthrisk health andproductivity program to manageemployee health The Committee supported theintroduction ofanupgraded absenteeism andrehabilitation. engagements andseparations, turnover, leave accruals, with relevant information to review matters onemployee The HumanResources Quarterly Reportprovided theCommittee of plansto overcome barriers to meetingthesetargets. targets intheDiversity Program andendorsements were made Regular reports were reviewed ontheprogress ofmeetingthe Enterprise Agreement. relations andfor negotiatingtheupcoming Ergon Energy philosophy for managingourpeople, for managingindustrial the Committee. The2010/11planoutlinestheorganisational The Employee andIndustrial RelationsPlanwasendorsed by hospitality expenses over $5,000were: and Hospitality. For 2009/10, thefollowing entertainment and Corporate Intent includesinformation onCorporate Entertainment At therequest ofshareholding Ministers theStatement of taking into account thenature oftheevent. 2009/10 for aggregate event expenditure andexpenditure perhead community groups. Reasonable limitshave beenobserved during and hospitality isprovided to employees, clients,customers and achieve itscorporate goals,from timeto timeentertainment In furtheringErgon Energy’s business interests andworking to E Toowoomba Christmas Party – Southern Employee Townsville Christmas Party – Northern Employee Party –Cairns Employee Christmas Far Northern E NT vent Name ER T AI NM E NT A ND HO S P December 2009 December 2009 December 2009 I T A L I TY Dat e I nvestment $8,991 $5,180 $7,639 aBBreviaTiONs HYSS HEEAS GSL GRI GOC GPS FACTS GECs Communications, Electrical, Electronic, ETU Division EVR EV ERP EMPs ELT EIC EBIT DREDs DCDB CMC CFMEU CESAP CARE BSPs Association ofProfessional Engineers, ASX APESMA AMWU Australian Municipal,Administrative, Clerical AMP AMACSU AER AEMO A&TSI ABS Employee satisfaction ‘Have Your SaySurvey’ Home Emergency Energy Assistance Scheme Guaranteed Service Level Global Reporting Initiative Government-owned Corporations Global Positioning System Feedback andClaimsTracking System Gas Electricity Certificates Allied Services UnionofAustralia Energy, Information, Postal, Plumbing& Endangered, Vulnerable andRare Electric Vehicles Enterprise Resource Planning(Ellipse) Environmental ManagementPlans Executive Leadership Team Electricity Industry Code Earnings Before Interest andTax Demand ResponseEnablingDevices Digital Cadastral Database Crime andMisconduct Commission Queensland) Union (MiningandEnergy Division Construction, Forestry MiningandEnergy Community Electrical Safety Awareness Plan program Cyclone Area ReliabilityEnhancement Bulk Supply Points Australian Stock Exchange Scientists andManagers, Australia and Kindred Industries Union,Queensland Automotive, Metals, Engineering,Printing Asset ManagementPlan and Services Union Australian Energy Regulator Australian Energy Market Operator Aboriginal andTorres Strait Islander Air Break Switch ZIP V2C UbiNet TEP SWER SPS SupervisoryControl andData Acquisition SHADO SCI Remote Observation, Automated Modelling, SCADA ROAMES RFDS RECs QESI QCA PCB ORF ODR NPAT NMP NIRC NGER NESB NPPs NCC NEM MSS MCE LEP IVR KPIs ISO IRC ICT ICCS ICAM Zero IncidentProcess training Value to Customer metric Ubiquitous Telecommunications Network Transitional Environmental Plan Single Wire EarthReturnpowerline Stand-alone Power Supply Officer Sexual Harassment andAnti-Discrimination Statement ofCorporate Intent Economic Simulation Royal Flying Doctor Service Renewable Energy Certificates Queensland Electricity Supply Industry Queensland CompetitionAuthority Polychlorinated Biphenyls Opportunity Review Forum Organisation DesignReview Net Profit After Tax Network ManagementPlan Network Investment Review Committee and Energy Reporting Federal Government’s NationalGreenhouse Non-English SpeakingBackground National Privacy Principles National Contact Centre National Electricity Market Minimum Service Standards Ministerial CouncilonEnergy Long-Term Energy Procurement Interactive Voice Recognition system Key Performance Indicators International Organisation for Standards Investment Review Committee Information andCommunications Technology International Customer Service Standard Incident CauseAnalysis Method 71 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 ABBREviATiONs 72 ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 iNDEx cOMMON iNDusTrY uNiTs OF Measure iNDeX management ...... 21 customer disconnections / credit cultural heritage ...... 32 credit rating ...... 55 behaviour ...... 2, 63-64 corruption and anti-competitive contact centre, performance ...... 7 misconduct ...... 2, 63-64 Conduct, Code of / official complaints management ...... 20 company structure ...... 57 . .safety . . 2,. .8, . 13,. . 22-23,. . 34-35, 68 community, electrical donations ...... 2,. .21-22, . . . 36,. . 45 community sponsorship / Community Service Obligation ...... 54 community engagement . . .19-23, 31, 41-45 Strait Islander ...... 21-23 communities, Aboriginal and Torres climate change response 2, 9, 11, 13,. 39-45 . network . . . . . 8,. .12, . .16, . 18, 24-25, 56 capital investment, in the bushfire mitigation ...... 32 bullying and harassment, workplace . . . . .49 Board, performance review ...... 63 Board, committees of ...... 63 bill payment options/advice . . 19,. . 21. . . . . awards 13, . .2, 20, 48-49, Inside Back Cover audit, external and internal ...... 54, 64-65 ASX Corporate Governance Principles 57-70 asset 10, 16,management/planning 26-32 . asset base ...... 4,. .7, . 55,. . 56. and graduates ...... 48 apprenticeship, traineeships tCO LV HV GWh MWh kWh MW kW W kV V DEEFR LTIFR AIFR CustomerCustomer minutes Minutes is a measure of the number of customers interrupted multiplied by the duration of a SAIFI SAIDI air conditioning 6, . penetration 19,. . 24. . . affordability of electricity . . . . . 2, . 18...... 2 -e

ihvlae alternating current above 1,000V one GWh equals 1,000 megawatt hours or one millionlow voltage kilowatt hours one MWh equals high1,000 voltage kilowatt hours gigawatt hour the standard ‘unit’ of electricity which representsmegawatt the consumption hour of electrical energy at the rate kilowatt hour m kilowatt watt kilovolt volt (DEE) x 1, 000, 000 / Exposure Hours. (DEEs) associated with work done by our employees (DEEs x million / exposureDangerous hours). Dangerous Electrical Electrical Event Frequency Events Rate. A safe work practice measure reportingthat tracks period. Dangerous Lost ElectricalTime Injuries Events (LTI) x 1, 000, 000 / Exposure Hours.Lost Time Injury Frequency Rate. Number of lost-time injuries per million hours+ Medical worked Treatmentover the 12 monthInjuries (MTI) x 1, 000, 000 / Exposure Hours. All Injury Frequency Rate – measured as number of injuries per million hours worked.power outage Lost orTime outages, Injuries incorporating (LTI) any staged restoration. number of occasions each customer is interrupted during the relevant periodSystem (interruptions). Average Interruption Frequency Index. Network reliability performanceon average, index, indicatingthat customers the average are without electricity during the relevant periodSystem (minutes). Average Interruption Duration Index. Network reliability performance index, indicating the total minutes, egawatt generation, electricity.9, 11,. . 13, 39, 43, 44 financial performance / ratios . . .7, 12, 54-56 our...... 13, . .60-61, . . . 62. . Executive Leadership Team, incidents ...... 2,. .32, . .39-45, . . 68, 69 environmental management / entertainment and hospitality ...... 70 energy trading performance ...... 69 initiatives . 11, . .19, . .32, . 41, 21-22, 43-45 energy conservation employees, women ...... 9, . 13,. . 48. . . .Islander ...... 9,. .13, . .21, . .48-49 . employees, Aboriginal and Torres Strait employees ...... 4, . 13...... employee engagement ...... 2, 44-45, 70 management . . 2,. .10, . .13, . 28, 30-31, 68 emergency / business continuity Electricity Industry Code, compliance . . . .69 electricity distributed ./ .generated ...... 8 electric . . vehicles ...... 39,. . 42. . . . . Earnings Before Interest and Tax 7, 54 . . . . . drug and alcohol . . .testing . 38,. . 68. . . . . dividends ...... 54-56 diversity, workplace 2,. .48-49, . . . 64,. . 70 Directors, Board of ...... 58-59, 62 directions and notifications ...... 67 maximum ...... 2,. .6, . 12, 16, 19, 24, 27 demand, growth in peak / program ...... 11, . .12, . .27-29, . 41, 43 demand management Dangerous Electrical Events . . . .8, 13, 34-35 customers ...... 4, . 6,. .7, . 12. . customer-initiated capital 25, works54 . . . . customer, financial hardship . . 2, . 21...... customer research, satisfaction 7, 20...... customer privacy...... 69 tonnes of carbon dioxide equivalents alternating current above 32V and not exceeding 1,000V of one kilowatt over a period of one hour one MW equals 1,000 kilowatts one kW equals 1,000 watts a measure of the power present when a current of one ampere flowsone kV under equals a pressure1,000 volts of one volt the unit of potential or electrical pressure quality of supply ...... 29 purpose, . . . .our ...... 4 profit, Net Profit After Tax 7, . 10,. . 54,. . 56 procurement and logistics . . . 16,. . 54. . . . . prices / electricity 4, tariffs 7, 12, . . 15, 54, 57 performance management ...... 6-9, 70 organisational . structure ...... 62 organisational culture ...... 70 Organisation Design Review 13, 15, 47, 62, 70 operational efficiency 7,. 12,. . 15, 18, 54, 56 network, securing. . . . .the ...... 8, 24-33 and control ...... 11,. . 13,. . 16,. 29 network, remote monitoring Standards . . . . 2, . 8,. .10, . 13-14, 16, 33, 42 network, reliability Minimum Service network, capacity ...... 8, . 24,. . 29. . . network vision, adapting . . . . 26,. . 42. . . . . network & asset statistics ...... 4 Network Management . 24,. . 66. . Plan . . . delivery of ...... 8,. .7, . 31,. . 53. network maintenance plan, network losses ...... 39 modular solutions ...... 16-17. local government . . 11, . .31-32, . . . 34,. 59 local employment ...... 2, . 54...... live line work, suspension of 29,. 33,. . 37. . liabilities ...... 55-56 Joint Workings program, 12, 16 Energex . . . . . functions ...... 16,. . 63. . . . . investment / opportunity review industrial relations ...... 49,. . 50,. . 70. . history, corporate ...... 4 Guaranteed Service Levels ...... 20 emissions ...... 9,. .11, . .13, . .31, 39-40 greenhouse gas Google Earth ...... 11,. . 52. . . . . working conditions ...... 49 workforce, profile / turnover . . 9, . 52...... workforce planning 7, 15, / utilisation 47. . . Work Group Leaders...... 47,. . 51. . . . . weed management ...... 32 water conservation ...... 32 waste management ...... 32 vision, our...... 4 vehicle fleet ...... 39 vegetation management . . . . 31,. . 53. . . . . values, our SPIRIT...... 4, . 47...... training and development ...... 47-48, 70 . . . .UbiNet ...... 10,. . 16,. . 29,. 50 telecommunications network, summer preparedness. . 28,. . 33,. . 42,. 44 strategic planning and reporting cycle . . . .66 targets ...... 6-9, 66 Statement of Corporate Intent, stakeholder engagement . . . . . 2, . 65...... SPARQ Solutions Pty Ltd . . . . 57,. . 63. . . . . solar energy ...... 42-44 .reporting ...... 4,. .7, . 57,. . 65. shareholding Ministers / service area, .centres ...... 4-5,. 70 .2, &. 8,safety . 10, 13, 29, 35-38, 47, 68, 69 safety, workforce health risk management ...... 27,. . 67,. . 68. . right to information ...... 66 revenue...... 7, . 54,. . 56. . . responsibilities, corporate . . 2,. .4, . 57. . . . resources, use of ...... 32 remuneration...... 49,. . 70. . . . . Energy Regulator ...... 10,. . 12,. . 18,. 67 regulatory determination, Australian Christine Robertson Energy Education Advisor

Working with the

Mark Biffanti community Area Operations p 22 Manager Burdekin

James Bangay Manager Information Strategy There when you

need usp 30 Advancing

technologies The attached CD contains the Annual Financial Report for Ergon Energy Corporation Limited and its p 53 Controlled Entities – including the Director’s Report, our Financial Statements and Notes, as well as the Directors’ Declaration and Independent Audit Report.

It also includes an electronic version of this report, a summary of our Statement of Corporate Intent and an index of the Global Reporting Initiative (GRI) indicators.

Additional printed versions of the Annual Financial Report can be obtained by contacting us on 13 10 46. Ergon Energy’s Annual Stakeholder Report 2008/09 won KEY SERVICE CENTRES the ‘best overall’ category in the Queensland Public Sector Annual Reporting Awards, as well as Best Government- Cairns owned Corporation/ Statutory Authority Annual Report Showing 109 Lake Street CAIRNS QLD 4870 and Best Corporate Governance Annual Report. Townsville (Registered Office) Leadership 22 Walker Street TOWNSVILLE QLD 4810 The report was also highly commended by the Energy p 51 Mackay Supply Association of Australia (ESAA) Sustainable Practice Cnr Gordon and Gregory Streets MACKAY QLD 4740 Framework Awards and maintained Silver benchmarking Rockhampton standard in the Australian Reporting Awards. Cnr Fitzroy and Alma Streets ROCKHAMPTON QLD 4700 Maryborough Rosemarie Price 97-99 Adelaide Street MARYBOROUGH QLD 4650 Customer Response and Toowoomba Improvement Manager Cnr South and Hampton Streets TOOWOOMBA QLD 4350 Brisbane This report is printed on FSC certified 9 Lives Silk 80 61 Mary Street BRISBANE QLD 4000 environmentally stringent coated paper. ERGON ENERGY ANNUAL STAKEHOLDER REPORT 2009/10 REPORT STAKEHOLDER ANNUAL ENERGY ERGON

GETTING THE BALANCE RIGHT

ANNUAL STAKEHOLDER REPORT 2009/10

Customer Service 13 10 46 7.00am – 6.30pm, Monday to Friday Faults Only 13 22 96 24 hours a day, 7 days a week WORKING TOGETHER TO MANAGE ELECTRICITY DEMAND Life-Threatening Emergencies Only Ergon Energy Corporation Limited Triple zero (000) or 13 16 70 ABN 50 087 646 062 AND SUPPORT QUEENSLAND’S WAY OF LIFE 24 hours a day, 7 days a week Ergon Energy Queensland Pty Ltd Office of the Customer Advocate ABN 11 121 177 802 ANNUAL STAKEHOLDER REPORT 2009/10 Customer Advocate PO Box 15107 Brisbane QLD 4002 [email protected] ergon.com.au